Procurement and Sales are two important business processes that are often described as opposites. Some companies may find these two departments at odds as they argue about which one is more important.
If you take a closer look, though, you can see there are several similarities between them. The best outcome for business can be achieved by looking at how both Procurement and Sales are equally beneficial to the company’s bottom line.
What is Procurement?
Procurement deals with strategies for acquiring goods and services over a long period of time. It is a sum of many parts, such as sourcing, supplier relationship management, category management, and more.
It’s important to understand that Procurement, at its core, is about acquiring the products and services necessary to do business in a way that meets quality requirements and does so in a way that is low risk and sustainable over the long term.
What is Sales?
Sales can be described as the process of selling goods and services to a customer.
Sales consists of many different parts, such as actually selling goods or services, sales pipeline management, customer relationship management, contract management, marketing, etc.
To see how Sales is similar to Procurement, take a look at the following eight points.
Top 8 Similarities Between Procurement and Sales
1. Relationship Management
In Procurement, it’s supplier relationship management (SRM) and in Sales, it’s customer relationship management (CRM). Both departments are dedicated to maintaining relationships with stakeholders inside and outside the company.
2. Contractual Law
Procurement deals with contracts between a buyer (the company) and a seller (the supplier). Sales also deals with contracts between buyers and sellers, but in their case, the company is the seller and the customer is the buyer. Both departments have to make sure they uphold their side of a legal contract.
3. Stakeholder Management
Stakeholder management is similar to customer and supplier relationship management. However, stakeholder management refers to managing relationships other than the buyer/seller relationship. Both departments have to respond to the needs of shareholders, executive management, transport and logistics, credit control and any involved statutory bodies, such as governmental regulations.
4. Service Level Agreements
Every job type or profession provides a service, and in many cases, this is covered by a service level agreement. This is the same for both sales and procurement professionals. Both have deliverables that need to be met and that are measured against a service level agreement.
5. Use of System Tools and Enablers
There is a variety of tools and enablers available to help manage all or discreet parts of the relationship between buyer and seller. Sales typically relies on CRM solutions such as Salesforce or Pipedrive. Procurement uses SRM solutions alongside a variety of tools to manage all or part of the P2P process, including e-sourcing solutions or requisitions management software.
6. Maximum Value for the Lowest Cost
Sales and Procurement both desire to obtain maximum value for the lowest cost. Sales is responsible for achieving maximum value with the lowest cost when selling the products and services, while Procurement is responsible for buying goods and services with maximum value at the lowest cost.
Sustainability is a clear objective for both departments. Sales, on one hand, needs to continuously meet and fulfill the needs of a customer, while Procurement, on the other, needs to keep business operations running unabated.
Negotiation is the cornerstone of both Procurement and Sales. Both need to have robust negotiation skills that allow them to concede when prudent and achieve required objectives without giving away too much. Sales and Procurement can achieve more by changing from an “us vs. them” approach to a shared vision of negotiations. While a traditional approach may be trying to get the lowest possible price from a procurement perspective or to obtain the highest price from a sales/marketing perspective, a more mutually beneficial outcome for all negotiations would be to collectively explore possible savings and improvement opportunities.
By examining these eight similarities, it’s possible to see the synergy between these two critical functions. At the end of the day, both departments are working together towards increasing a company’s profits by procuring the low-cost, high-quality, on-time goods and services needed for business and selling the end product to customers. Sales and Procurement are different, but by adapting a philosophy of shared savings and successful outcomes, companies will notice an overall improvement of business processes.