Why Your Procurement Staff and Sales Department Must Work Together
For many companies, the procurement department and the sales staff might as well speak different languages. After all, one group is busy working with vendors to buy raw materials while the other is working with customers to sell finished product; their job descriptions are so different they would seem to have nothing in common. These differences give the perception that by working together they won’t add much value to the business. In fact, it is these differences that make their collaboration so valuable for their companies.
Take the example of a company that was manufacturing, among other things, an aluminum chair. At this company, the procurement and sales divisions operated completely independently of each other. So, when the procurement department had the chance to purchase the raw materials required to build a particular chair at a significant discount, they bought all the raw materials they could. They were thrilled at what they thought was an opportunity to save the company a substantial amount of money.
What they did not know was down the hallway the salespeople had discontinued that same chair due to a less-than-enthusiastic response from customers, convinced that doing so would be better for the company.
Both groups were focused on the same goal, to improve profitability, and both were doing what they thought was best for the company, but by not communicating they managed to accomplish just the opposite.
Too many organizations separate their staff into a purchasing department and sales department while failing to recognize how closer collaboration between the groups could significantly improve operations and profitability. Sales and procurement are one of the best examples of this. They have much to learn from each other, but too often do not get the opportunity. Everyone involved is working with the same toolkit to accomplish what is essentially the same task—they are all negotiators looking to get an ideal price. In a world that is changing rapidly, where slow or poor communication can put you out of business in the blink of eye, sales and procurement practices need to change.
Communication is key. One way to create closer ties between the two departments is to make sure both are represented at sales, purchasing, budget and forecast meetings. In addition, having them all work out of the same office provides plenty of informal opportunities for knowledge sharing. If you are primarily a remote work company, schedule joint video calls with the sales and procurement teams to keep the information flow current between the departments.
Here is an extreme example that might help further explain this concept. In commodity trading businesses its common for the merchandisers to handle both the procurement and sales activities for specific commodities. There is no separation between sales and purchasing. It’s seamless because its handled by a single department, the merchandising department. You may have places in your business where this model would fit.
Sales and procurement are not the only departments that can benefit from working as a tighter knit group. Keep your eyes open for other groups that might benefit from a few more face-to-face encounters. Get them together. They will start speaking the same language too, bolstering profits along the way.
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