subject: Landing Big Sales – Watch Out for New Buying Techniques [print this page] Changing business environment: Changing business environment:
Over the last 30 years I have seen the business environment undergo vast changes, prompted by a number of factors. One of the main factors is the need to curtail the waste of time and money and increase the efficiency and profitability of the organization. In any company, purchase of goods and services cost between 40-60 percent of the company's revenue and any saving in this cost adds to profitability. You will find that most large companies have now adopted new buying technologies, driven by the IT revolution. These new technologies like just-in-time delivery, quality control rejection analysis, vendor performance rating, etc. have influenced their methods of doing business, particularly with the small suppliers.
Just-in-time deliveries:
I will take just-in-time as an illustration of the new technology. Large companies no longer hold big inventories of stores and spares in their warehouses. The cash locked in, as well as the costs of space, infrastructure and insurance put a drag on their finance. This burden is now passed on to the small suppliers who are expected to hold their stocks of manufactured products in their own warehouses. As per their purchase contracts, they have to deliver the products to the large companies in the required quantities, as per the agreed schedule.
This arrangement also implies that the small manufacturer has to maintain adequate stocks of raw materials and auxiliaries to ensure that the production levels and the flow of supplies to the large companies are not affected. In turn, the small manufacturer benefits by way of big sales and long term supply contracts.
Declining trends:
To a great extent, the small manufacturers have been able to adopt their production strategies in tune with the new buying technologies of the large companies. But I find a flaw in one area. Many of the small companies still cling to their old mindset and have failed to make concurrent changes in their selling techniques to achieve big sales and thus stagnate in the same "small" category.
It is this mindset that I want them to overcome. Some examples of its impact on small companies are given below:
The arrival on the scene of new companies which have a more adventurous and accommodative approach to their business;
In spite of regular participation in bids and proposals, the acceptance rate for the small companies remains low;
The new and relatively larger companies encroaching on their turf and grabbing a share of their business;
Wild fluctuations year over year in the revenues of the small companies, which they are not able to address;
Landing big sales:
I must confess that the current selling techniques and methodologies of the small companies are not appropriate for the complex buying process used by large companies. Single buyers are almost an extinct species in such companies. The purchasing head of a large company will likely be a professional manager, leading a team of subject experts in diverse fields like finance, IT, R&D, HRD, SQC, etc. To hold purchase negotiations in this kind of a situation, the ambitious executives of a small company should develop his own team, maybe smaller in size, of dedicated subject experts to support their leader. During negotiations, the subject experts of both teams will face each other and sort out the issues. The final decision on the big sales will be more informed and beneficial to both the seller and the buyer.
Landing Big Sales Watch Out for New Buying Techniques
