3.4 Managing Internal Customer Relationships

As a purchasing professional, you play a key role in acquiring the goods your company needs to operate, but you may not control the process or the decision. In fact, for every purchase, six social processesThe way work gets done in an organizational setting. That is, social processes determine who does what to get a job done. are performed: initiator, gatekeeper, influencer, decider, purchaser, and user (see Figure 3-2). The decision makers who perform these roles are called the "buying center." Your job is to figure out how to work with and influence the members of the buying center.

Sometimes, of course, you may not want or need a lot of control over purchase decisions. For example, for simple buys—like restocking office supplies—a single person may perform all six roles. These purchases must be made, but they are small-dollar buys that do not affect the company's competitiveness. The most cost-effective and convenient solution may be for each office manager to use a corporate purchasing card (in essence, a credit card) to buy office supplies. Your job as the purchasing professional is to select the card issuer, negotiate a great contract, and design a process that office managers find easy to use.

In other situations, you want and need influence. For instance, complex, strategic buys—like acquiring capital equipment for a new wafer fabrication facility or entering into a long-term development and supply contract for a vital subassembly—determine the firm's ability to compete in the marketplace. Such decisions are high-dollar, high-effort, and high-impact decisions. They are also high-visibility buys. Many people will be involved in the decision, including a category team and senior management. If you do your job well, you can help drive a successful process and assure a positive buying outcome. The question is, "How can you wield more effective influence with key internal customers?"

Now that you know that different people play diverse social roles in complex buying scenarios, you should realize that by identifying who the key decision makers are and what makes them tick, you can exert the most productive influence. Gathering psychological intelligence can help. This involves assessing sources of powerThe ability to influence what happens—or doesn’t happen. There are five primary sources of power: Referent, Expert, Legitimate, Reward, and Coercive. , evaluating personal motivations, and figuring how the key decision makers perceive you. If you use psychological intelligence to help key decision makers achieve success, your influence—and your image as a strategic player—will grow.

Not every member of the buying center is equally influential. Moreover, influence varies depending on the nature of the buy. Worse, nobody wears a sign that says, "I've got the power," making it difficult for you to discern each decision maker's real influence. For example, one mining-equipment supplier thought it had made a big sale of a new type of automated machinery. However, the sales team ran into an unforeseen roadblock when the maintenance personnel "vetoed" the sale. They didn't want to learn how to maintain the machines—or manage needed spare parts. 2 Neither the supplier's sales team nor the buying firm's purchasing group had done its homework. To avoid such surprises, you need to figure out how each member of the buying center wields influence for a specific buy.

Figure 3-3 describes five sources of power and how each influences other decision maker's behavior. 3 The first four sources of power invite some form of responsive behavior. Coercive power, by contrast, often leads to resistance (and potential conflict). Your job is to understand the source of power for each member of the buying center. Strong personal relationships with colleagues are one key source of insight. Great sales people know and leverage this fact. You need to borrow this page from the sales playbook. Purposeful observation—i.e., looking for signs of power and how it is used to influence day-to-day decision-making—is another source of insight. For example, in the mining-equipment example above, the maintenance personnel held no coercive, reward, or legitimate power. It was easy for the sales team to overlook their influence. However, the mechanics possessed expert and referent power. Think about it: Wouldn't you listen to your trusted and well-liked mechanic if he warned you that maintenance costs on the car you were thinking about buying were going to be too high?

To summarize, assessing personal power helps you identify key influencers. Grasping how power works helps you earn colleague's trust and respect, which will lead to commitment to your key buying initiatives. Don't forget, commitment is far more powerful than mere compliance!

Getting into the minds of colleagues to ascertain what is really driving their decisions is extremely difficult to do well. You are neither a psychiatrist nor a mind reader. However, you need to do your best to accurately diagnose motivations. The following three hints can help:

Hint #1: What Get's Measured, Get's Done. This cliché has the virtue of being true. Performance measurement motivates decisions. If you can determine how your colleagues' performance is measured, you will gain credible insight into how they will make decisions.

Hint #2: Which Benefits Do Colleagues Value Most? Your colleagues do not view all benefits as equally valuable. Three types of benefits associated with buying decisions influenced them: product, process, and personal (see Table 3-1).

• Product Benefits are often closely tied to performance measures. If you collect and analyze a company's supplier scorecards, you will discover that five product benefits are almost universally valued: cost, quality, delivery, agility, and innovation. Other issues such as after-sales service or impact on operating costs may also be important.

• Process Benefits focus on how the purchasing process makes the internal customer feel. Is the process easy—both to understand and to comply with? Consider the office managers mentioned above. If the p-cardPurchasing card – a company charge card that allows a buy to be made without using the traditional purchasing process. P-card purchases are typically small-dollar volume, and are used when the formal purchasing process would be too cumbersome. process is hassle free, managers will gladly comply. If the process is opaque, cumbersome, and frustrating, managers will resist. Design processes for ease of use.

• Personal Benefits deal with your colleagues' sense of identity, personal well-being, and self-concept as well as how others perceive her. If you can boost an influencer's likability and respect, you will likely gain her support.

Hint #3: What Are The Risks? Remember, almost all decisions incur risks. As you can imagine, influencers view a high risk-to-benefit ratio unfavorably. They also perceive certain risk profiles as unacceptable. Influencers will not support decisions that deliver product and process benefits at the peril of risks that are primarily personal.

You need to design your internal customer service strategy and manage your specific personal interactions to work with and support key decision makers' motivations.

To enhance the supply function's influence on key decisions, you need to know how your colleagues—the internal customers for purchasing services—perceive purchasing's performance. The best way to find out is to ask them. To begin, invite your internal customers to rate purchasing's performance on a continuum ranging from negative to positive. For specific activities/processes, ask colleagues to evaluate two dimensions: 1) purchasing's services and 2) purchasing's people. Map their responses to the two-by-two matrix shown in Figure 3-4. As you uncover negative perceptions, dig a little deeper by asking colleagues for a more detailed assessment. These two questions can help:

1. What do you expect from us as a purchasing and supply organization?

2. How well are we performing compared to your expectations? In other words, is there a gap between your expectations and the actual experiences we provide?

Colleagues' answers to these questions will help you identify where you are performing well and pinpoint where you need to improve. Too many service gaps will cause purchasing to lose credibility and power. Purchasing's poor performance hinders your colleagues' ability to do their jobs. Your likability and respectability will suffer as a result.

Once you know who the influencers are, what motivates them, and where you stand, you can develop a strategy to improve supply management's position of respect and influence. Your best long-term approach is to improve performance to close any service gaps you have discovered. However, to get maximum return on your performance improvements, you need to let your colleagues know that you listened to them, valued their feedback, and acted on it. Then, you need to share your success stories. Show colleagues how what you have done helps them achieve their own goals and contributes to your company's market success. Combining performance with proactive communication reinforces the respect your corporate fans have for purchasing and helps you win over your critics.