Why's it often so hard for small agencies to work with large corporate clients? Andrew gathers answers and suggests some solutions.
Last week I raised a question on LinkedIn:
Procurement is often a major obstacle when giant companies want to work with small consultancies like ours in a hurry – so why can’t big corporations pre-approve an agency/expert that they know they’ll work with at some point before they need them?
This led to a great conversation with constructive points being shared from different players in the procurement process.
A refreshing reminder of how social media can help us learn!
Here are the main points which I gathered, when thinking particularly about organisations buying innovation services, such as the product research projects that we do at Muir Wood & Co.
Small agencies are nimble, affordable, bring entrepreneurial energy, and are less likely to palm you off with a clueless junior the moment the contract is signed.
Corporate innovation leaders should find 5 independent agencies that you'd love to work with in different scenarios/project types. Get them in the system now, before you need them. You could buy something simple like a half day workshop from them all.
The paperwork would be the same so you and procurement could do them all at once. The questions would be the same, so they could all be onboarded together. Then next time you need this kind of supplier in a hurry: boom! Pre-approved.
Adding another task to an innovation leader’s intray will be a tough sell, thinks Daniel de la Cruz of Polymensa. They aren’t necessarily going to be thinking about this resource gap until it becomes a burning need. His advice is to try to stay front-of-mind, so that they think of you when that project comes up.
“It's about getting clients to prioritise this process amongst the 100s of other things they already have on their plate”
Daniel de la Cruz, founder at Polymensa
Tim Perry, strategy consultant and innovation agency veteran, agrees with my idea of onboarding an agency or expert in advance if the commissioning client knows they're going to need them at some point. Doing it in the heat of the moment puts a lot of unnecessary pressure on the process and can even result in work starting before a PO is issued: a risky scenario. However, he’s not certain that the incentives are always aligned for procurement to think in this way.
“Good procurement people know that their role is to facilitate growth through value creation, not just cost save. As the saying goes ‘You can’t cut your way to growth.’”
Tim Perry, Strategy, Innovation and Design Leader
Is it such a big ask for procurement to do this proactively? We’ll find out their perspective next…
Drawing on years of procurement and buying experience, Kirsty Carr agreed that a diverse supply chain is a benefit to businesses, but she added that there’s a lot more cost to onboarding than meets the eye.
“In reality onboarding suppliers ‘just in case’ won't be met with enthusiasm, especially if it diverts resource away from current projects.”
Kirsty Carr, consultant and former Head of Procurement at a global food business
In big corporations, outsourcing goes through multiple stages and people, not just procurement: there’ll be legal, finance, budget holders, even for relatively small engagements. So just pre-approving suppliers willy nilly is unlikely to be popular!
However, there is a possible compromise! Kirsty suggested that procurement teams could make their Pre-Qualifying Questionnaire more easily available to suppliers to submit for accelerated assessment. She was also keen to add that whilst it’s common to see procurement as a source of friction or cost cutting, there are many in the field working to simplify the process and help provide more diverse options for stakeholders.
But this really needs to come from the top, says Joe Scarboro, who’s 2017 Touchpaper study and toolkit aimed to improve collaboration between startups and corporates. There are many ways that corporate procurement can make life easier for smaller suppliers, but it really needs to be an organisation-wide priority.
“Essentially, unless there is the political will at the corp to work with smaller entities more effectively (and adapt processes), smaller entities will just continue to be the square peg in the round hole.”
Joe Scarboro, CFO at Replan, Startup Advisor and founder of Touchpaper
When working with big client procurement teams, Muir Wood & Co has certainly been lucky enough to experience some of the Touchpaper toolkit recommendations: shorter payment terms; reduced indemnity requirements; even getting free feedback from inhouse lawyers to tighten up the wording of our contract. But these were situations where we were already the chosen supplier.
Surely there’s a better way of doing this.
So the challenges are:
Here’s what I came up with:
From my experience, more than half of the procurement questions are the same for every client. So, building on Kirsty’s suggestion above, why not make them identical or at least publicise them, so that potential suppliers can have our answers/documents ready for the most common questions.
Who knew government was ahead of the game? It turns out that the Single Procurement Document already exists for public sector procurement to streamline the process and reduce errors and repetition.
A fun private sector example of this is Progression’s collection of career progression frameworks, which makes career development more structured and transparent:
How about one day a year where innovation leaders and procurement teams get together and build/tend their list of agencies/experts with different project types in mind, then help get new ones onboarded (or at least partially approved) in one fell swoop? I know this is a time commitment, but it can be run as an efficient and even fun day, there could be snacks!
Again, from my Googling, some government departments seem to be ahead on this. I guess because they need to be transparent and they procure so much that it just makes sense to move their attention upstream.
[Edit: Kirsty says these exist in certain businesses/industries and they're called "supplier days"]
This one’s a longshot, but stay with me. If we’ve been approved by procurement teams in some of the biggest companies in the world, shouldn’t that stand for something? I know there are loads of legal reasons why this won’t work, but in principle it should speed things up at least.
In finance, where there is far more at stake, SWIFT has built a shared KYC (know your customer) registry. Corporates can store their anti-money-laundering information securely in the platform and approvals are shared across institutions. BANKS can do it people!
Do I want to build a 3rd party standardised procurement approval platform? No. Do I want my company to be on it? Yes. If I hinted that it could be on the blockchain, maybe someone will pick up on this!
Maybe these solutions already exist – I’d love to hear about anyone working on this. Or are there corporates we could learn from that are already being more innovative about procuring smaller businesses?
My interest in this topic, if you haven’t worked this out yet, is that I want Muir Wood & Co to be one of those pre-approved suppliers: hit us up if you want to add a high quality user research consultancy to your list of providers!
Cover illustration by muirwooddraws