Procurement and KAM
22 September 2016, The Norwegian Business School
The workshop in Oslo attracted a very participative group of delegates: 68% were practitioners whilst academics made up the rest. The theme for the day centred around procurement and the role of key account management and key account managers when/where:
- procurement is outsourced
- changes occur in EU public procurement directives
- procurement is increasingly sophisticated in the demands that it makes on the supply chain
- public procurement is primarily concerned with fostering innovation.
Chris Gregers, Senior KAM with Circle K Norge AS, traced the evolution of the sales role in the Norwegian fuel industry from basic sales through value based sales, relationship based sales, and what is called challenger sales. From the last two approaches KAM processes began to appear focusing upon value creation, joint ventures and developing deep industry expertise.
Despite these changes in approach the tendering process and the objective being to “avoid” tenders, they still dominate the industry and they are becoming more complex, costly and time consuming. The actual tendering process is often outsourced to professional buyers who have little understanding of the industry, resulting in a focus upon unit costs rather than lifetime value.
The discussion that followed highlighted the importance of relational symmetry between buyer and seller, and suggested that in this industry the disproportionate power of procurement militated against the effectiveness of supplier differentiation. A further question emerged, What is a strategic relationship? This question was proposed as a topic for the workshop in Lugano scheduled for June 2017.
Kevin Wilson from Kedge Business School addressed the issue of change in public procurement and reviewed the impact of the 2014 EU directive on procurement in Europe in general, and upon the UK in particular. The general conclusion was that the new regulations, adopted by the UK in 2015, are largely positive and offer enlarged opportunities for key account managers to influence specifications. The new regulations offer far greater potential for dialogue between suppliers and contracting authorities moving the focus away from tendering for pre-determined “solutions” to exploring the nature of “problems” that the procurement exercise was intended to resolve. In addition, new provision allows for collaborative innovation and pre-procurement engagement that affords the opportunity for generating far more cost effective solutions.
Giles Breault from the Beyond Group asked the question What’s next for procurement? In a rich presentation Giles shared the results of a major research project looking at the changing nature of procurement in the private sector: They found a movement from operational to strategic positioning within the firm, where traditional purchasing is giving way to a focus upon spend and cost optimisation and value creation across the business with an emphasis on supply chain collaboration. The issue of innovation through business partnering had resonance with the next presentation from Per Ingvar Olsen.
Per Ingvar presented a case study on innovation focusing on networks that facilitate the process. The case traces the invention and eventual commercialisation of Transchateter Aortic Valve Implants over a period from 1989-2014. The role of KAM increases in potential towards the end of the commercialisation process, reflecting the dynamics of supplier-user interaction and the increasing presence of collaborative agreements and formalised procurement practices.
What delegates liked:
- The procurement/KAM link
- Content spurred interesting debate
- Debate evolved and speakers responded to changes of direction
- Different perspectives were introduced by members offering “real” examples
- The smaller size of the group made it more productive
- Mixed group of consultants, academics and practitioners added interest
- Consistency – well balanced and well prepared to give an holistic picture
What delegates didn’t like:
- The room had no windows
What they would like next time
Experienced speakers (not that our current speakers were viewed as inexperienced)
Debate of a specific issue with speakers taking opposing views
Topics for future meetings
- CEO/SMT involvement in and understanding of process
- Senior management entanglement
- KAM ability to manage senior team and explain it properly to them (presenting the case for KAM)
- Managing C level expectations
- Change management – KAM as a change agent
Impact of new procurement directives on SMEs
What is a strategic relationship in KAM?
Are there different KAM relationships?
“I really enjoyed the workshop, I like the fact that discussion is encouraged rather than just sitting through a number of presentations as often the chats between and the questions bring the subject matter to life and I can think about how to replicate within my own work, so yes, very useful. I also think its good to have a theme or topic so we know the nature of the content” (Sarah Baker RM Ltd)
“Just a short note to say that I was greatly pleased to make the presentation at the workshop yesterday and found the whole day very interesting and useful.” (Giles Breault the Beyond Group)
“I found the day very enjoyable- the blend of academic and practitioner input gives a real richness to the debate. I think Giles’ session in particular was invaluable and a real positive that procurement & KAM have the same goal- to collaborate & create value” (Mike Green RM Group)