B2B buying and selling in our ‘new normal’
By David Lunn, CP APMP, MCIPS
The new normal
It’s hard to believe that ‘COVID-19’ and ‘pandemic’ only became daily terms some 18 months ago. Last year, I opined about what a pandemic changed landscape could mean for procurement and its consequent impact on organisational buying and selling.
So what’s transpired since then? Some of the predictions have clearly come to pass (e.g. securing supply chains). Other developments have not been so obvious – as yet (e.g. streamlining of tendering processes). But we have seen dramatic changes in work more generally with our shift to virtual, offsite and remote activity. This is clearly also accelerating sourcing technology initiatives.
What is now certain is that the effects of this pandemic will have a long tail. High vaccination rates notwithstanding, sporadic lockdowns will continue and domestic/international border reopenings will be treated with caution. People will stay working remotely. Technology frontiers will continue to be challenged. Australia and New Zealand will continue to feel the societal, geopolitical and ultimately, economic shocks along with the rest of the world.
From a bidding perspective this means there is no chance we will go back to how it was before. We’ll be forced into adapting to different procurement process rhythms and making the seller-side changes necessary to thrive under the so-called ‘new’ normal.
Certain uncertainty for buying and selling
So what does the ‘new normal’ of business to business buying and selling look like? Here are three ideas:
1 – Continued reduction of supply chain vulnerability.
From basic building materials to sophisticated electronic components, we have seen the restrictions of international borders affect industrial capabilities all around the world. The squeeze on supply lines has caused delays on projects of every size and scale. Globally, manufacturing and exports continue to be slowed by fresh virus outbreaks, with companies being hampered by an ongoing lack of materials ranging from computer chips to items as simple as wooden pallets.
In particular, the disruption to Chinese manufacturing and exports has had a direct effect on the Australian economy. With over 25% of manufactured imports coming from China, the bottlenecking of this major supply source has resulted in higher costs, delays, or unavailability. Many of these imports have a direct impact on essential goods and services, a pertinent example being the supply of face masks and PPE.
Whether we like it or not, mitigating these supply chain vulnerabilities rests largely with diversification in sourcing activities and building local buying and selling capability to reduce reliance on international supply chains.
2 – Substantial changes in commercial and account management practices.
Supply chain vulnerabilities will have an effect not only on current contracts, but future bids also. The Commonwealth recognises these unprecedented times are having a significant impact on businesses of all sizes. Many suppliers may not be able to fulfil their contractual obligations due to either lack of supply and/or lockdown restrictions. This could put their financial viability, ability to retain staff and supply chains at risk. In these circumstances, Governments expect their buying entities to support suppliers through proactive communication and managing specific pandemic related issues in a collaborative manner. In fact, we may see much more sourcing and service delivery collaboration than ever before.
While this support is very welcome news for selling organisations, on the other hand sellers and suppliers also need to deal with a lot more ‘choppiness’ with respect to future opportunities. Planned projects are being delayed. Existing contracts are rolling over. New projects are being announced – to the surprise of most. It’s not unreasonable to assume that traditional capture, work- winning and delivery practices will be in for a major shakeup.
3 – More sourcing diversity.
In the face of continued uncertainty, the Commonwealth has also advised its buying entities to be cautious with their expectations about what goods and services are available on the market. This tentativeness has resulted in more multi-stage procurement processes and more preliminary Requests for Information (RFIs) being issued. Conversely, buyers have also been enabled to accelerate procurement processes for essential emergency goods and services such as vaccines and other medical supplies. This means sellers need to be more flexible in developing solutions, ensuring they are primed and ready to respond to differing bidding requirements and procurement timelines.
Rolling with the punches
Bidding processes have always involved uncertainty. BidWrite’s 13 years of frontline tendering experience has taught us to always question dates, assertions, criteria, budgets and expectations. However, the pandemic has exacerbated this uncertainty. A very obvious manifestation of this is the unusually long delay in tenders ‘dropping’ and projects starting. As a key part of our clients’ bidding value chain, we see the direct effects on their resource management, staffing and business planning activities.
So what are three things sellers can do to meet the challenges issued by the new normal?
1 – Capture and position.
Now more than ever, it’s important for your upstream sales and business development activities to keep open lines of communication with buyers, seeking ways to help co-create a path through current buying and selling challenges. If there was ever a time for market-led proposals and innovative, alternative tenders, this is it. Getting on the front foot will also help build trust that you are there for your buyers, through thick and thin.
2 – Be ‘deal doing’ ready.
Despite inevitable delays, the good news is that buyers will eventually buy and they will continue to use competitive sourcing processes to do so. Tendering teams will need to be skilled in, and ready at short notice for, pitching/proposing into a widened palette of market testing processes. Developing the skills and toolkits of your bidding team should be a priority.
3 – Analyse your own supply chain.
Can you secure your stream of supply to guard against pandemic related risk, not only for the goods and services you offer, but for key service inputs that matter to you? With so much still up in the air, it’s good practice to nail down the things you can. Strengthened relationships with your suppliers will help reduce uncertainty and allow you to demonstrate resilience to buyers, while also securing the mission-critical services needed to remain agile.
Focus on what you can control
COVID-19 will affect us for the foreseeable future. In times of change, the ability to deal with ambiguity is an important skill. As Stephen Covey suggests, one of the 7 habits of highly effective people (and by extension, organisations) is focussing on the things you can control. Part of that involves identifying what is within your grasp and what isn’t. The next task is to do something about those things that are.
From a selling perspective, are your adaptation priorities clear? Do you know what you need to do? And if so, are you doing it?