We need to understand procurement’s functioning to perform productive prospecting. Industrial procurement can be described as a collaborative decision-making process. First, industrial organizations determine the requirements —goods or services— they will purchase. Next, they search and find different vendors that can meet these determined requirements. Finally, after evaluating both products and vendors separately, they choose any of them and place the order.
First step of industrial procurement: Recognition of requirement
The first step toward purchasing something is recognizing a need for it. This may include determining the requirement to purchase a new product or reordering a product when it is necessary or falls below a predetermined level of stock. In most companies, this will entail a requisition process. It is critical to involve all stakeholders at this point to avoid complications later in the industrial procurement process.
The procurement process begins when a company identifies a problem or requirement, which they can solve by purchasing a good or service. Anyone within the organization can identify a need or a challenge that they should handle. In some situations, a sales expert may help the company determine a requirement that has not been previously recognized.
The industrial procurement team evaluates the current condition. Before they purchase the product, they must determine what purpose it can fill. Once the procurement experts define the problem or need and get an obvious idea of what they need, they move on to step two.
Second step of industrial procurement: Specification and research
After the procurement team clarifies the requirement, they define the specs of the product they need. This stage involves the determination of features, quantity, and technical specs of the required product —goods, service, or solution—. The team’s technical members narrow down the options by specifying what a product should offer. The technical staff prepares detailed specs that set out the product’s quantity, features, and technical requirements.
Once a requirement has been established, the specifications of the goods or services required must be determined. Technical specs or part numbers would be included in this category. If the item is not previously acquired, this list of specifications is prepared with the agreement of all technical personnel concerned. Detailed specifications along with adequate engagement with all departments involved will help avoid costly errors later in the industrial procurement process.
Industrial procurement research
Procurement team members then use those specs to search for potential suppliers. First, they review their existing suppliers as a tradition and necessity. As you know, no industrial company likes to get into a risky adventure, especially while making a strategic procurement. Their first choice tends to be their current suppliers if they are happy with them, of course. However, suppose that they don’t already have an established relationship with a vendor that offers the product or are not pleased with their current suppliers.
In that case, the buyer company often looks for new suppliers. Procurement team members search online to find alternative products and companies that match required specs and product prices.
Additional to web searches, industrial procurement experts search for potential suppliers based on the various sources of information like trade journals, recommendations, trade shows, industrial directories. And of course, they always consider significantly the industrial sales professionals who visited their company earlier.
The specification and research stage is the most critical stage for a prospecting expert. You can support this stage by advising the buying team on best practices and collaborating with them to specify the product features.
Importance of industrial procurement
The industrial markets encompass a variety of business sectors. The industrial procurement function is essential because it sits at the interface between field and operational activities. Industrial buyers directly impact the production rate and performance of their companies through purchase processing, sourcing and supplier relationship management, and inventory management.
Significantly, procurement departments have evolved into a strategic function in recent years. They contribute to improving production and innovation through their in-depth market expertise.
Consequently, the type of products, the decision-making process of customers, and the purchasing terms are the factors that influence the prospecting strategy of an industrial sales expert. Buyer companies want to work with their chosen suppliers for a long time to reduce costs, improve quality and performance.
This perspective makes long-term partnerships the indispensable feature of the industrial market. For new long-term partnerships, you need to reach new customers. That’s what we aim to do. Industrial B2B salespeople should understand and monitor the buyer’s procurement process to achieve an effective sales and marketing operation.