Secrets to Effective Procurement in Competitive Markets with Jeremy Smith

Mike (00:24.208)
Jeremy, thanks ever so much for joining me on Higgle, the B2B sales for podcast.

Jeremy Smith (00:32.235)
Yep.

Jeremy Smith (00:41.28)
Thank you for having me.

Mike (00:42.732)
And we've known each other a long time. So yes, kind of a long, fascinating history. And we still grow out and socialize together, which I love, which is great. But for my audience, Jeremy will give you his background in a second. But this is all going to be a perspective from a true buyer. This is a buy side perspective on what a lot of you face when you meet tough procurement people in bigger RFP processes. And hopefully, Jeremy can give us some insights into what

Jeremy Smith (00:51.241)
Do indeed.

Mike (01:12.588)
So first of all, Jeremy, just a bit of background about yourself. What do you do and who are

Jeremy Smith (01:19.692)
Sure. So I'm the MD of 4C Associates. We're one of the biggest procurement and supply chain consultancies in the UK. We work broader than that. We work in the US. We work in Europe as well. However, you know, in the UK, we are one of the biggest. We have 120 people who do, as you say, buying day in, day out. Some of that's advisory, some of it's doing. We work across many...

Half of this is public sector, so we have a lot of the work that's done in the space of central government, local authorities, higher education, regulated infrastructure, that sort of stuff. Then we work in retail and consumer, life sciences and financial services as well. So got quite a broad perspective that I'm hoping to share with your audience. I've been at 4C for 13 years now, but before that I had another 10 years of procurement consultancy as well.

and one year of being a quantity surveyor. Not that that's much use.

Mike (02:19.642)
I was going to say, and what's something unusual about yourself? Probably that you're a quantum surveyor.

Jeremy Smith (02:25.42)
Well, that's what I did. I did a podcast again recently that's just been on the internet where I was talking about degrees and how useful they are or not in the modern world. So yeah, the fact I do procurement and supply chain now yet had no real education in it. still, you know, there was that I still see a use for degrees, but are they a reason for hiring decisions? That's a small life experience now.

Mike (02:35.902)
Yes?

Mike (02:47.486)
Absolutely.

Mike (02:51.462)
I think absolutely right, definitely. Yeah, yeah, yeah. And also something else I guess is that your vinyl collection, how big is it now? I've forgotten.

Jeremy Smith (03:01.903)
I don't know. I don't know, but it's getting bigger with much the annoyance of my wife. But yeah, it is. You know those big Ikea things where you can fit eight sort of slots that are perfectly designed for vinyl? I mean, they don't design them for vinyl, but that's what most people use them for. It's one and a half loads, so it's 12 of those slots that are about that big. So yeah, it's a lot, but I use Discog to keep track of it all.

Mike (03:06.152)
It was bending shelves last time we spoke.

Jeremy Smith (03:26.865)
And yeah, it's getting through a big old number that's now on the insurance list of named items.

Mike (03:32.232)
Exactly. Absolutely. Yeah, I you introduced me to disk consciousness, which is very helpful. So let's get into the main questions. So again, anyone listening, you'll be hard pressed to meet anyone with Jeremy's expertise in procurement. That's for sure. And having worked with him for many, many years, you taught me huge amounts about procurement as well. So yeah, I'm looking forward to this discussion enormously. first question.

Jeremy Smith (03:37.076)
Mm.

Jeremy Smith (03:47.2)
Thank you.

Mike (03:56.574)
So what do procurement look for typically when they're evaluating suppliers as part of an RFP process?

Jeremy Smith (04:05.612)
Right, so I'll put my cynical hat on for you to answer this question. So typically how a RFP process will be structured is they'll aim for about five to seven people on the long list and they'll try and narrow it down to a shorter list. That shorter list will likely be expected who of those seven will be on it. It will not be shaped, you they will not manipulate it to make it so, but they will have an idea of who is most likely. And that's because what they'll do is part of that five or seven, you the number will vary depending

what it is that's being purchased, is you'll have the ones that are incumbent, the ones that have worked there before, the ones that know your organization, the ones that you know are highly capable. Problem is, highly capable know your organization usually equals more expensive. Now sometimes that's because they know how the business works and therefore they price in that factor of knowing what reality actually is on the other side.

Mike (04:59.124)
Mm -hmm.

Jeremy Smith (05:01.834)
Sometimes it's because they become opportunistic and they're a little bit lazy and go, well, I've got the relationships now, I know how it works. They can't possibly get rid of us. It's too much of a barrier to entry or barriers to change in that case. So you've got those dynamics. Now, the internal buyer, not procurement, the internal buyer probably wants it to be one of those hypothetical three. What procurement should be doing is stimulating that competition. So they're not saying it's not gonna be any of those three. They want it to be one of those three, because that's easier for them as well.

but they want one of those three to be commercially astute and competitive. So they usually go and get a disruptor. They'll go and get someone who's, you know, giant and on the outside, but wants to get in. And maybe one or two other scenarios of suppliers who can stimulate that competitive tension to get the best outcome. So all of those, a small innovator, very much so because they're usually, one, aggressive, two, have a new way of working, but sadly are on the outside looking

Mike (05:50.516)
so a small innovator.

Jeremy Smith (06:01.908)
And people don't tend to, as much as they'll say nice things to small innovators and the whisper sweet nothings to them, and this is not procurement, this is the buyer, they don't want the small innovator because the small innovator has that little bit of risk. However much this innovation is good, they have that little perceived amount of risk, whether it's true or not. So that's not from procurement's point of view. Procurement usually wants the innovator. It's the business who usually doesn't want the innovator because it just says risk, risk, risk in their heads.

Mike (06:14.633)
Yes.

Jeremy Smith (06:28.748)
Whereas they want big and reliable, knows me, you know, and all that. we're trying to stick, a good RFP process will mix together, know, innovator disruptor with solid and reliable plus, you know, big multinational. It doesn't have to be multinational, you know what mean? A big, supplier who, and the whole idea is each one of those is scaring the other one into going, let's just cut to the chase and just get to what is the right, what is the fair price for that fair?

demand. So that's the structure that's going on. And what I would say to any one of those suppliers from the outside in is be honest with yourselves and know which role you're playing. If you're the incumbent, it's fairly obvious. If you're on the outside in, I say they will be whispering sweet nothings to all of them. They'll be whispering it to the main competitor of the incumbent. They'll be whispering it to the new upstart innovator that everyone's talking about. And they'll be whispering it to the new upstart innovator that may be a spin -off of one of the current incumbents

Mike (07:28.52)
Yes.

Jeremy Smith (07:28.726)
you it's a team from one of those and they've gone there. So they'll be saying, you know, yeah, you can win it, you can win it. And they'll be telling the truth, you can win it. However, the reality of them winning it is not usually one in seven in my hypothetical seven people involved. It's usually loaded towards and not in a manipulative way, it's just the reality of the situation is loaded towards and I'm talking private sector procurement here, not public sector procurement, then that's completely different. But in private sector procurement,

Mike (07:53.438)
Correct. It's quite different. It

Jeremy Smith (07:57.228)
It is loaded towards somebody because there's you know, just this relationships inside the organization that are already Existing the switching costs exactly that are there the sunk costs that may be there, you know Have they already loaded 20 people from that organization onto their IT systems? Well, that's a FAF to change all of these things are influences They're not decision makers, but they will influence it on that decision. So So that's what's sort of going on in the

Mike (08:03.934)
Correct. The switching costs.

Jeremy Smith (08:27.062)
There's a process, know, the whole, here's a spec, give us a bid, we'll compare them, we'll verify them, we'll negotiate with you. And then that happens to whichever one of the seven you are, right? That won't change. But the reality of why you're one of those seven and your role within it, will, that's, those sorts of decisions are going on. And the thing that I see most is the suppliers are not humble enough or to know which role they're playing. And they sometimes think,

that they are, they won't use words like this, but I've been promised the work, I've been told all these great things about what an opportunity is for me. The seven have had that. And it's true, any one of you can win it. But it's also, you've got to look and go, really, what role am I playing? Because if you play your role correctly, you absolutely have a good chance. But if you are the agitator and you think you are the anointed one,

You've got it wrong, right? So it's that understanding of talking to procurement, and they're not gonna tell you what role you're playing, right? They might sort of give you enough information for you to work it out, but they're not gonna sit there and say, yeah, you're on the outside looking in. They're gonna say, you can win this, but you've got to do all these things, right? And when they say all these things, if they're actually saying, look, you've got to build relationships with the decision maker, well, then you know you're one of the disruptors.

Mike (09:26.11)
Correct.

Jeremy Smith (09:53.426)
you need to build the relationships. But if they say, actually, look, you you're not bringing innovation, or you've been here a while, and we need new ideas, then you know you're one of the ones who are the incumbent. But then you've got to play on the fact that you know how this business works, there's no learning curve, and there's different things that you do depending on those roles. So being honest with yourselves and going, that's my role in this ecosystem of suppliers who are bidding.

Mike (10:00.786)
Yeah, exactly.

Jeremy Smith (10:20.042)
That's the important thing I would say for any supplier bidding in an RFP from the other side.

Mike (10:24.35)
Definitely. So you've got to spot the signals. Really, really important. Recognize your role and qualify really, really hard.

Jeremy Smith (10:29.448)
Mm -hmm. Qualify hard, yes, because, yes, yes, qualify hard.

Mike (10:35.348)
Research I saw from the US recently, I do a lot of work with marketing agencies, decent size, and research from the US about kind of bigger agencies said that when an incumbent's bidding, they win 66 % of the work. And I was like, that feels about right probably actually, is that the incumbent will win two thirds of the time, roughly.

Jeremy Smith (10:57.974)
Yeah.

Jeremy Smith (11:02.092)
Yes, I would say I've not seen the stats, my gut feel, that feels about right. But what I'd say is to anybody who's not the incumbent, is it find out how long that incumbent's been there. If they've been there two cycles, so let's say six years plus, there's probably a desire to change them to get a new way of thinking. Again, it depends what your product is that you're selling, right? Because after sometimes you just want that surety and stability, right? But most of the time it gets a bit

Mike (11:23.432)
Exactly.

Jeremy Smith (11:32.16)
people want to change. If they've only been in the bit like US presidents, I guess, you know, there's a sort of two cycle max. Whereas, you know, one one term, is that really long enough to start doing it? Now, if you've if they've only been there for one term, you can of course you can still win. Of course you can. But you just probably have to do a bit more research into finding out how is this how is this supplier seen? And what is you know, what is the general feeling? And it's hard. That is hard. I know that's hard. And it's also not

Mike (11:36.926)
Yeah

Jeremy Smith (12:01.782)
for procurement to go around, know, snagging off suppliers to the others. It's not their role, right? They're not going to do that, but you can ask questions to find out.

Mike (12:12.044)
So, next question. So, what's usually going on when a supplier thinks they've been ghosted in an RFP process? And the scenario here is basically you're towards the end of the process, you may have done presentations, you're one of, you suspect three, and then it just all goes quiet. And they think they've been ghosted. What's really going on? And not always, but what are some of the themes that are happening at that point?

Jeremy Smith (12:32.608)
Mmm.

Jeremy Smith (12:38.698)
Yeah, yeah. So I'm a procurement person who sells, right? So I'm on the other end of this as well. And it's very frustrating. And I assure you that no procurement person sets out to do this because their reputation will be damaged. And when they want to run another tender, then any goes to supplier will just go, no, thank you. I'm not going to get involved with you because you wasted my time. Right? So no one goes out to do that. However, I'm well aware it happens. And again, it's not deliberate.

Mike (12:59.572)
Very good point.

Jeremy Smith (13:07.648)
So what they're often do, well it's usually one of two. They've been wasting your time to go back to that qualification process. You've been a stalking horse to agitate an incumbent. Now in that case, if you have been doing that, and it happens to everybody, big and small.

They should still feed back to you. They should still not leave you hanging. But the longer it goes on, I would say the more likely that's what's happened and they're negotiating with the other person. Okay? Now it's not always, but I would say using that two out of three analogy, I would say two thirds of the time, couple of weeks without anything being said is they're negotiating with someone else. However, it can also be that you've done such a good job that you were the agitator.

and you have taken the work away and they're having that conversation. They don't want to come back to you and say yes or no because they're not ready because you've done such a good job that you, wow, you we weren't expecting to do a supplier change here. We need to really go through it. And they're doing a lot more internal governance and admin to check with finance, check with legal, doing some onboarding stuff. Now again, you know, why can't they tell you that? That's a very fair question, right? But they don't feel ready because what they're trying to do is keep.

well, some sort of contingency that if they are going with you, they don't want to lead you on and then tell you that, sorry, know, something very insignificant internally has gotten in the way of you and your big contract that can make or break your company. I mean, they don't want to do that at that point. Same with the other way, you know, they don't want to, if you are not likely to get it, they don't want to tell you that because what in case something happens with the incumbent and somebody turns around and puts the price up at the end or something.

Mike (14:26.301)
Absolutely.

Jeremy Smith (14:50.688)
They don't want to do that either. So what's happening is sadly admin bureaucracy and often they've not done their job well enough to have moved all the sort of get all the ducks in the road to use a bit of manage and speak that they're ready to say, yes, this is what's going to happen. So it's unhelpful because just communicate. I always find, you know, be honest with people. They'll go, but they're usually worried

Well, I've got to keep the two plates spinning because I know one's going to fall and I don't know which one. I think it's going to be this one, but I don't want to tell the other one because then they'll take the team away that they've promised and all that. it's, it's one of procurement's worst traits. And I say, nobody goes out to do it at all because it damages their reputation and it'll make their job harder in the future. However, it does happen and usually that's what it is, but my advice and that's all it is.

is the longer the silence goes on for, and I would say over two weeks, I would suggest you're not, because over two weeks, I as a procurement person was starting to worry about, know, what are they thinking? They're going to go off and put their resources elsewhere. So yes, they may not be responding to you as much as they were, or as quickly as they were. After a week, start being a bit more pointed about respond please. I use the whole, and it's genuine.

I've got a team sat on the bench waiting for this project. You said, well, start next week. It is not starting. I could be selling those people elsewhere. You are costing me money. Of which any normal human being would go, yeah, that's true. I should probably say something compounded by the fact that a really cutthroat person who might be doing a delivery will then go, he's about to charge me for this, isn't he? And yeah, I mean, I'm not, but that's what I mean. You know, I could.

Mike (16:38.398)
Yeah.

Yeah, exactly. Yeah, absolutely. So again, yeah, message to like people that listening, they're not being devious, they're not being unpleasant, 99 % of the time, it's a process they're going through. But if you don't hear for two weeks, they are negotiating with someone else.

Jeremy Smith (16:54.72)
Yes. That's my experience, yes.

Mike (17:00.446)
Same here, absolutely, definitely. Brilliant. So next question is, so how should suppliers be qualifying a procurement -led process? And I think maybe a good example, how do you qualify things, your own opportunities?

Jeremy Smith (17:15.476)
Yeah. So we have three questions. Do we want the work? Can we win it? And can we deliver it? So do you want the work? This is the problem. The answer is nearly always yes. You have to be really behind these three main questions, right? There's a lot of other criteria we have around alignment with strategy, size of the work, size of our bench at any one time. You know, there's a lot of things that varies in terms of do we want it? But most people start with yes as the answer.

Mike (17:31.454)
There is.

Jeremy Smith (17:45.124)
And it's a harder one to be ruthless with yourselves on because you can distract yourself with some work. know, it's that stretch bit of work that you, know, big seven figure chunk of money and you know, it's exactly in the region you want to go into in a service you want to go into, but you might stretch yourself. And it's one of those harder things to do is that qualification. But then, you know, the can you win it is quite important because if, and we've been on public sector work as well as we've been on private sector work, but if we receive a cold,

Mike (17:50.598)
Absolutely.

Jeremy Smith (18:15.028)
request of RFP out of nowhere. Most people go, fantastic, our marketing's working. But sadly me is I'm going, we don't know them. We are one of those stalking horses, right? There's an incumbent they don't like, or there's an incumbent they're trying to stimulate. So I'm not saying we won't bid for it. Of course we will, but we will bid as if it's, well, we might as a fair point, yeah. We might bid for

Mike (18:36.03)
Or you might.

Jeremy Smith (18:40.384)
But if we do, we'll probably treat it as an irritation account in sort of management speak in terms of, well, we'll charge you a premium. And we may not also put as much effort into the bid as if we actually knew the person. So if we knew the person, they came to us and they wanted to talk to us and we helped shape the bid somewhat. And yes, this is procurement people talking about all the things that you do on the other side, right? We are human beings and we are a service company like everyone else's. it's that, that is one of the key things I would say, not only the

Mike (18:59.368)
Yep. Yeah, exactly.

Jeremy Smith (19:08.17)
alignment with strategy and can you really do it? But do know the people? Do you know the economic buyer or is it just procurement who's come to you? It was just procurement who's come to you. Again, go, hmm, no, because procurement doesn't make the decision. Procurement inputs into the decision, the economic buyer makes the decision. And if you don't know the economic buyer, they're gonna go, who's this? Procurement suggested. I don't know who this is. In which case, you're not in a very good place. So that qualification piece.

Mike (19:18.631)
Absolutely.

Mike (19:33.854)
So Jeremy, let's dig into that a little bit more as well because I often bang on about this to people. And I say to people, look, whose money is it? And they go, well, procurement control the money. I'm like, wrong answer. It's the budget holders' money, but procurement are there to run a strong process to run the governance, to ensure there's fair play, and also to ensure you're getting good value for money. And we've both been there.

Jeremy Smith (19:46.794)
No. No, no, no.

Jeremy Smith (19:53.782)
Yes. Yep. Yep.

Jeremy Smith (20:01.292)
Show you some money, yeah?

Mike (20:03.988)
probably been in situations where we've recommended to an economic buyer an alternative solution, which has got maybe better commercials, and they've overridden the decision and gone, no, I'm going to go with X. And ultimately, they're accountable. It's their budget. It's their money. So what should you just give people your view on? What's the real difference between procurement and the IT director or the HR director or the marketing director?

Jeremy Smith (20:13.088)
Yep. Yep. Yep.

Jeremy Smith (20:31.83)
So IT director, so the economic buyers, or it could be any one of those ones you just listed there, it could be anybody, they're the one who's got the ultimate in need for this service. And it could be a commoditized service, a more transactional in approach. You're buying an hour of a person, or you're buying a month of a subscription, or you're buying something that's very commoditized and defined. Or you could be buying a outcome, in which case you have to work much closely with.

Now procurement will need to work out which of those you're doing because their processes will vary depending on what it is you're buying. But the economic buyer also has to be clear on what it is that they're requisitioning. Because the reason why procurement exists is one, they do it professional approach. As you say, it's a process. There's an art to it as well. It's not just science, there's an art as well. But there's a chunk of science.

in terms of that process that you're running to ensure competition, parity, and as you say, ultimately value for money. The person who defines what value for money is, is usually the economic buyer because they've said, I want to buy that for this reason. Now usually economic buyers, and not all, of course not all, but often economic buyers have different outcome criteria and success criteria than procurement do. Because procurement just want to make sure it's done properly.

And sometimes you'll all recognize these things. They see procurement as a hindrance because I know who I want. I've worked with them before and yeah, and you may end up with that particular supplier, but you're overpaying because you know, we've done this before or you know, particularly in consultancy world, right? You know, we've done it probably last week for another client. Right? So from that supplier, right? You know, we know what they charge to other people. Of course, we can't go in and say this is what it is, but when that supplier sees it over the table, go.

Mike (22:19.07)
Exactly.

Mike (22:25.8)
Yeah, exactly.

Jeremy Smith (22:26.186)
Right? so, so, and suppliers think that they're always, you know, innovative and you've got a massive USP, but the reality is they don't always. So that you can persuade the economic buyer that you are completely differentiated. And that's the art of it, right? Don't get me wrong. I say, I'm a procurement person who sells. I persuade people that I'm, know, 4C and us are different than our competitors.

And of course we believe that we are and of course we think we are. But the person buying it might actually go, yeah, a little bit, but I don't care enough about that. You're all the same as far as I'm concerned. And that's one of the bits that I would say to any supplier, be really honest with yourselves. the procurement, well, persuading the economic buyer that you're completely different will help you get on that list in the first place. It may allow them to really put the pressure on to define the spec upfront.

to make it so that, you know, they've literally written down that, you know, your name has to have the letter four and the number four and the letter C in it, in which case, well, you just narrow down our competition. Thank you very much. We're good. But procurement should probably stop that happening, right? And that's why procurement exists because there has gone all competition, right? So, and therefore price competition and price pressure, and you're just gonna be the price taker, it's called, when they go, how much is

Mike (23:27.516)
Exactly.

Jeremy Smith (23:50.668)
50 pounds, well, kind of do 40, no, it's 50 pounds. But what if I give it to someone else, but he can't, because they're not called 4C, and you just said, he's got to be called 4C. And it's, I'm generalizing a lot there, you get what I mean? But that's why the roles of the two people are different. Now, procurement can sometimes go too far, they can become too process -led, it can become too computer says no, in which case that's not a pure synergy of how the economic buyer and procurement should fit together.

Mike (23:58.6)
Exactly.

Jeremy Smith (24:19.53)
They should fit together so that you get the best solution out of desire and specification from the economic buyer and the best process and experience of buying this before from procurement. And it's when the two come together that you get a truly good answer. If you have one doing it to the other, you don't get a very good answer. And that's when suppliers get annoyed and you might actually end up buying the wrong

Mike (24:44.602)
Good. So next question for you, which is about building relationships with procurement. again, I get asked this a lot. How do you build professional relationships with what are often seen to be kind hard -nosed, time poor procurement professionals? How does that work? Why is it important? And when do you do it? How long before you engage with them do you build that relationship?

Jeremy Smith (24:52.598)
Yeah

Jeremy Smith (25:05.494)
Yep.

Jeremy Smith (25:12.652)
As soon as you can because the answer because you don't know when the needs coming if you have been working with the economic buyer So your you know chief marketing officer using one of your examples if you've been working with them and talking to them And you've not spoke to procurement and then the knee comes out you will just be one of you know The the incumbents the favorites right if they don't know who you are. They'll look at it and go

Mike (25:32.798)
Correct. Exactly.

Jeremy Smith (25:37.92)
Now, if they know who you are, you don't have to take them out for dinner, and in fact, I strongly suggest you don't, right? Don't do these things with procurement people. But if they don't know who you are, you'll have a problem. But imagine this from the other side. Procurement people are approached all day, every day by suppliers, big, small, left and right, absolutely every type, just trying to do this. So you probably are met with this indifference of like, for God's sake, another marketing supplier wants to talk to me.

Mike (25:42.94)
Yeah, exactly. Correct.

Mike (26:05.66)
Another one. Exactly.

Jeremy Smith (26:07.498)
So you've got to do it in a way that stands out. Now, again, I'm not saying take him for lunch, but if you get your economic buyer, the end customer, to introduce you to them, and you do it in a very low maintenance way of saying, I just want you to be aware of who we are, I want you to understand why we're different, I want you to just be aware that we are here should you have any needs come up. If you go there and say, I sell marketing, buy some marketing, the defenses will go up, right?

It's just like, no, that's not how it's done here. We have a process. So the earlier the better, but the most low maintenance as possible. Because once you've had that initial meeting, they'll take another meeting. It's just getting that first one. And if the first one's a recommendation in and it's done in the right way, then you will have so much more success than either not doing it all because you think procurement's evil. That's not the right answer. Or it happens because you're sending them

know, 30 loads of spam in the last month and with the ever increasing cynicism that I have for that sort of stuff, it's like, doesn't work. As I say, one in 50 do I actually go, I like that and I'll respond. But the other 49, and I say, get, I probably get 20 a day, right? So you've got to think that you're not the only one doing it. Yeah, yeah, yeah. And some of them are repeat offenders. Some of them are new.

Mike (27:25.897)
Yeah, exactly.

Yeah, literally 20 a day.

Mike (27:35.432)
Yep.

Jeremy Smith (27:36.428)
And I say, what's a month probably? Do I actually go, go on, you've said that in a way that's interesting, but it's just not a strategy. You need someone, it's a referral. You need a referral from the person who is ultimately going to want to work with you. And if you can't get that referral from that economic buyer, back to my point at the beginning of knowing your position here, you're probably not front of the list to win potential work. So.

Mike (27:59.752)
No. Good point.

Jeremy Smith (28:04.01)
But if there is only one, if the economic buyer has a favorite, right, and we all know this happens too, if the economic buyer has a favorite and you know that's a barrier to you getting a referral in, then maybe you do have to go to procurement and maybe say it as bluntly as what I just said is, we're an alternative to the incumbent because the procurement person is probably also going easy on for everything. How am I to get value out of this? That relationship's too cozy, it's too pally, it's too comfortable. well, I've got to introduce some competition. here's one.

Mike (28:27.614)
Yeah,

Jeremy Smith (28:33.078)
who's actually identified for me themselves. Not easy, not easy, but that's the way I would go about it because then there's something in it for everybody.

Mike (28:41.832)
And you may not win the first opportunity that comes your way in that scenario, but there might be other opportunities further down the

Jeremy Smith (28:44.811)
No.

Jeremy Smith (28:48.672)
But if you bid on the first opportunity, then the economic buyer will see your capability. Might still go, sorry, not for me, not right now, but you've been seen. So your commercials have been seen, your USPs have been seen. So the next time that you go to the economic buyer who originally said, sorry, not interested, then there probably is a, on then, we'll find an hour, you tell me more. So as you say, it's not the first time, probably not the second time, but it could be the third.

Mike (29:16.614)
Exactly. So it's a long

Jeremy Smith (29:18.772)
It's a long game, but don't over invest. That's that qualification point. Don't over invest. Know where you are from both sides. And we do this from a procurement point of view, with the suppliers, right? We segment them, we understand who does what and when. Do the same to your stakeholders as well.

Mike (29:22.078)
Yeah.

Mike (29:35.572)
Very good. last question. So this is one that seems to be saying it seems to have risen up the charts recently. In the last six months, a lot of people have been saying that they're facing this situation. what should suppliers do when told we'll be using a reverse auction process next week to finalize rate cards? First of all, what does a reverse auction mean for the audience? And secondly, what do you do about

Jeremy Smith (29:38.411)
Yeah.

Jeremy Smith (29:57.494)
Yep.

Jeremy Smith (30:03.276)
Reverse auction, best way of describing it to a lay person is probably eBay. Start with eBay that you start. There's many, many different types called various different things as Japanese, as English. There's multiple different types, right? But basically it's an auction that you start at a point. And in this case, the price gets lower and lower until you go, can't go any lower, right? So it's a very, very blunt instrument, regularly used for highly commoditized items.

So if you were buying an iPhone, you could do it, because an iPhone has a spec. It has three specs, depending which one you got, but you know what you're doing, and what's the lowest possible price I'm willing to sell an iPhone for? Yeah, appropriate use for it. If you are doing it on a service, risky, because you really have to be able to prescribe exactly what you want. So if you're told that you're doing an e -auction next week, I'm afraid it's too late, right? You've got no choice, you won't persuade them out of it, it's gonna

Mike (31:01.662)
No, correct.

Jeremy Smith (31:02.336)
So your choice is walk away because you say, no, we're not different. And the reason why, I've probably skipped ahead a little bit there, is you have been decided, whether it's true or not, someone's decided that you are a commodity. The action that they're asking you to do is a commodity. Now you do do it on professional services, which is new. like lawyers, you can do it on that now, but you'll say it's not just, I want lawyers and I'm gonna do a race to bottom on the rate because you're gonna get the cheapest lawyer.

And if it's a case of I'm going to jail or not, I don't necessarily want the cheapest lawyer. But if you say, if I'm doing some conveyancing, you go, I don't mind having the cheapest lawyer, right? You conveyancing is conveyancing, right? But when it's corporate mergers or I'm going to jail, then I do care and I'm willing to pay a bit more, right? So there's a time and a place. And if the people are not doing it right, and you are actually trying to offer a differentiated service, then I would argue walk away. I

Mike (31:37.138)
No, exactly.

Jeremy Smith (31:59.808)
Don't go into it because it's a race to bottom on price, which is okay when it's a commoditized thing. It's not okay when it's a outcome -based thing because you can't say, yeah, but I'll do it twice as quick. No, they've not said that. They said an hour. So the fact that you do it in half an hour, they don't care. They still want an hourly rate in this made up example. So you can't change it if you've got that. What it means is they've got a lot of competition. There's a lot of other people involved because they know, because if they've only got one or two people and one walks away,

It's not gonna work, right? So it means there's a lot of competition. They've decided you're commoditized and it's too late for anybody to change your mind. walking away is probably the best way for you to ever change their mind. Because when suppliers walk away, it sends a message. But ultimately what's happened here is you've allowed yourselves to be deemed, even if you do not agree, to be a commodity outcome. And

Mike (32:56.222)
Exactly.

Jeremy Smith (32:57.758)
not a lot you can do when it's at that point. I'm surprised you said it's coming back. I'm not saying, you know, it's a very valid tool and, know, very useful when you're buying commoditized stuff. But I'm not, it sort of goes through waves of fads. You know, it was huge in the nineties, then disappeared. Then it came back in the, the, because only because like eBay type things were coming. Then in the early noughties, it was massive. Then it died a death in the teens. And, but people then have come.

Mike (33:13.822)
Yep, I think it does.

Jeremy Smith (33:27.35)
come back with it. And I say for commoditized stuff, very, very, very, very relevant, very useful. But you've got to manage the supply as well. They've got to their position. But yeah,

Mike (33:38.42)
I mean, I've seen it being used recently with marketing agencies. And to me, it's just like, if a procurement person is using it to buy marketing services, what they're really doing is they really are body shopping. They see this as a commodity and they're just buying people. They're buying people and hours. They

Jeremy Smith (33:48.48)
Yep.

Jeremy Smith (33:52.012)
There must be. There must be. A rate. Day rate, hourly rate. Exactly. That's all they're doing. they're not going to go, yeah, but you've got 15 years experience and you've got 16. You know, that nuance has gone. They'll have put people in, probably, they'll have put people in bands of, you know, 12 to 15 years experience. And that's it. You you can't argue, yeah, but my person in that bucket is better than your person. It doesn't matter. They've decided it doesn't matter. So unfortunately, in that scenario, the ship has sailed. You won't change their mind.

Mike (34:07.806)
They will. They'll be in buckets.

Jeremy Smith (34:21.63)
You might be right, but you won't change their mind. And you can go and tell tales to the economic buyer. No, they've agreed this strategy a long time before you say, that's how I don't like this. So again, stakeholder management from that point of view, make sure that your differentiation point is valid, not just that you think you differentiated, that you actually do have something, because that will stop the scenario happening in the first place.

Mike (34:45.478)
Exactly right. It'll stop them treating you as a commodity or you're talking with only one about the Kraljek matrix About you want to be in the top right hand corner not in the bottom left hand

Jeremy Smith (34:51.594)
Mm -hmm.

Yep, yeah, transactional in the bottom left hand corner and you will just be done

Mike (34:59.668)
Yeah, exactly right. Jeremy, it's been fantastic. Just in summary, what be your kind of like, couple of key points from this to anyone out there who, you know, there are five, 10 million turn of a company, they're starting to bid for bigger work in bigger organizations, it's getting into the enterprise territory, they're starting to meet more procurement people. So that is their early stages. What would be your couple of tips for them at the early stages of meeting procurement people?

Jeremy Smith (35:21.408)
Yep.

Jeremy Smith (35:25.356)
Build relationships, build relationships, but don't expect it. Procurement people, they don't have that budget, right? They are not the economic buyer, but build relationships as an awareness, but don't overdo it. If you overdo it, barriers will come up. And the other one is that probably just be humble, have some humility around what your actual service is. Everybody thinks they've got the best solution, the best offering.

But the reality is, it doesn't matter what you think, it's what the person buying it thinks. And if you can't articulate it to them, then you are gonna be commoditized and commoditized and commoditized. And if you don't know that that's happening, you've got a problem. If you're okay with it happening, then you compete in the right way. So those are the two things. Yeah, yeah, well, yes, because it's a race to the bottom. So your point around e -auctions.

Mike (36:13.704)
then you've got to be the lowest cost producer if you're a commodity.

Jeremy Smith (36:22.497)
the closer you get to the auctions, the more it is to erase to bottom on price. Everything else has been normalised out of your control.

Mike (36:30.322)
Yeah. Jeremy, it's been amazing. Thank you very much indeed. Where can people find out more about

Jeremy Smith (36:33.686)
You're LinkedIn, you'll find me on LinkedIn. The website is also a good starting point, www .4casociates .com. But LinkedIn, you'll find me on there. Usually talking on one of these.

Mike (36:48.678)
Exactly. Jeremy, thanks ever much for joining

Jeremy Smith (36:53.056)
Thank you.

Mike (36:54.846)
So let me just turn the recording off.