The act of consumating a business deal can be very exciting and fulfilling. It can also be a moment fraught with anxiety. [A variety of unwholesome metaphors could be brought in at this point, but I’ll resist.]  A business deal requires a buyer and a seller. The buyer has to satisfy needs that have an inverse relationship with the seller. The buyer wants a low price and high value per $. The seller wants a high price and a nominal value per $.

All buyers have a list of requirements: First, the buyer has to bring home a service or a product. Second, the buyer needs some kind of assurance that the transaction won’t go afoul by slow or non-delivery, poor quality, or shabby service. The buyer often has a third need, one that may or may not be evident from the beginning to the seller. Most buyers have a need to demonstrate that they have gotten a bargain. It is not enough to have merely purchased a thing- most people have a real need to bring back a kind of buyers trophy.

What many sellers may not appreciate is the kind of pressures that may be on a buyer in the B2B world.  The value of a buyer to his/her employer is the ability to get the lowest price under the best terms. The ability to put the squeeze on vendors is a highly prized attribute among buyers.  Some organizations actually consider their purchasing department to be a kind of profit center.

A company that is involved in technology development for their own use or for licensing may have several kinds of buyers. They may have a conventional purchasing department for paper clips, hardware, and commodity chemicals. This department is charged with sourcing and buying fairly ordinary things.

But the same company may also have a procurement group that focuses on the sourcing and purchasing of specialty items. In the fabulous world of chemical industry, a procurement manager may specialize in items that must be custom made or are otherwise scarce, highly technical, patented/licensed, or just plain expensive.

Some materials are particularly critical to a company. It may be a key chemical feedstock, a special reagent, a catalyst, or something that is difficult to make or is highly specialized. The procurement of specialized materials often requires the attention of a chemist. So, it is not at all uncommon to find chemists involved as procurement managers in the chemical industry. In fact, many high level procurement people I know were chemists early in their careers. 

Procurement people are quite important players in a company. They have heavy responsibilities and are always under pressure to perform. They deal in dollars and days. Their performance is easily monitored by their superiors by the simple metrics of dollars and delivery times. To put the delivery puzzle together, they have to negotiate and enforce specifications, price schedules, supply contracts, secrecy agreements, delivery schedules, and often international multimodal logistics. 

If a procurement person flubs a detail, like delivery of raw material on a certain date, a process shutdown at the plant could be the result. Depending on the magnitude of the fiasco, this could be a career ending injury for the manager.

We live in the age of just-in-time delivery of feedstocks. Raw material inventory sitting in a warehouse is equivalent to having a big pile of money sitting there. Extended warehousing of raw material inventory means that some amount working capital is is not only unavailable, but is not earning interest in an account somewhere.

Every query a buyer issues is an opportunity to work on lowering prices. Some materials are purchased regularly while others are more episodic. Some companies have a policy of buying under contract and others are satisfied to issue a spot purchase order as needed. Some buyers may have favorite vendors and others may not. Shopping for the best price usually means that multiple vendors are tagged for quotations.

Sourcing information is increasingly dependent on the internet.  Mysterious job shops in Asia or the Ottoman Empire are as easily found on a web search as are the venerable giants BASF or DuPont.  A lot of filtration has to be done by the buyer to sort out the authentic from the wannabe’s. It has been my experience at trade shows and on the web that many Asian suppliers are so anxious to cash in on the export trade that they will say yes to virtually every query.  They are not dishonest, really. They just have a severe can-do attitude. I’d do the same thing.

In the end, a seller needs to remember this about procurement people- Always do your best to make them look good in front of their bosses. That means offering a decent price and an honest assessment of delivery dates. A good price followed by poor delivery will harm a relationship as fast as anything. Be honest, earnest, and on time and your buyer will be good to you.

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