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Leadership in procurement creates bottom line profits

Stephen Bauld
Leadership in procurement creates bottom line profits

One responsibility of a procurement leader is to improve the organization that he or she serves.

Having a great deal of knowledge and understanding by itself accomplishes nothing. Procurement leaders must be able to apply what they know to move the organization they serve ahead in the competitive race.

As Booker T. Washington observed: “The world cares very little about what a man or woman knows; it is what a man or woman is able to do that counts.”

Over the years working as a purchasing consultant, my observation of a company’s ability to consistently win work through the RFP process comes down to paying attention to the finest details.

I have always been able to win work by having perfect scores on the non-pricing sections. By doing so, it is easy to win work without having to be the cheapest price. A race to the bottom on pricing is never a good idea.

I have said many times over the years during speaking engagements, in articles or in my procurement books, writing or responding to RFPs is a specific and unique art that if mastered creates incredible bottom line profits.

I was talking to a good friend of mine last week who reminded me of a project I worked on over a decade ago. A high-profile U.S. private sector company wanted me to help them bid on a multimillion-dollar Canadian government contract.

During my initial phone call with the president of that company, he asked me what I knew about his services and what my overall understanding was of his products and company. I replied absolutely nothing. He laughed and said, “Then how the hell can you help me?”

When I explained to him that my expertise was in responding to the detailed questions in the RFP to gain maximum points in every section, and his expertise was in giving me all the specific nuances of why his service was the best option for the government, it made more sense to him and his team.

Translating his knowledge of the service he provided into the procurement language that would hit all the required points for each section is always the key to success in winning any RFP.

I also knew what the Canadian government was looking for from the way they had laid out the questions and points required for the various categories in the RFP. This knowledge comes from decades of working in the public sector. This was also the U.S. company’s first attempt bidding on a government contract in Canada.

The next day I left to meet with his team to start the process of attempting to win this RFP, which had six other bidders (five of them Canadian). All of them were supplying a similar service and all bidding to win this very lucrative 10-year contract.

To make a long story short, we won the contract with a perfect score on all the criteria in the RFP, except for the price. However, because we had the highest score in every other section that was enough to win the RFP even though we lost points by coming in at the highest price point.

This story is one of many that proves how valuable an experienced procurement person can be when writing and responding to high dollar RFPs.

In my opinion the procurement position in most companies needs to be upgraded to attract the talent required to win high dollar RFPs.

When measuring the additional salary for leaders in the procurement field against the benefit of what could be achieved through savings from an experienced purchasing manager, the choice is clear.

In recent years, larger companies have turned to hiring a range of purchasing consultants familiar with the different types of project needs.

Writing and responding to RFPs in the private sector, and the public sector, may require different approaches.

Make sure you call the consultants you are thinking of hiring to ensure they have the proper experience for the project that you are bidding on.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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