Team Approach to Procurement Pays Off at Lockheed Martin

Engineers are equipped to counteract "back door" selling during the sourcing process

When engineers at Lockheed Martin learned how to provide bid details to suppliers without compromising the company's negotiating position, they joined a team approach to procurement that led to significant cost reductions. With this new knowledge, the company was better positioned to achieve optimum supplier costs and reach the best product pricing. The bottom line: greater profitability and competitiveness.

An important element in this team procurement approach was a unique training program for engineers and other team members to help them understand a subtle fact-seeking process used by salespeople called "Back Door Selling." Available from Benedict Negotiating Seminars, the videotape-based training program helped engineers to turn the tables on a highly skilled sales process that was eroding their company's bottom line.

Lockheed Martin's engineers exhibited enthusiasm toward the training program as they pondered such questions as: What information should we provide to suppliers? What information can be held back without inhibiting the problem solving process? They also reflected on past experiences during the learning process by sharing insights and suggestions for good supplier relationships.

According to one company engineer, Tom Cirillo, "Our engineers have a new awareness of the need to design and source products wisely. We've learned that information is power - and every time an engineer speaks with an outside supplier, he or she is taking part in the negotiation process."

Information that's unintentionally divulged during early supplier conversations with design engineers - who typically are the initial contacts in the sourcing process - may have compromised the company's negotiating leverage. Based on the videotape part of the program, the engineers learned how salespeople gain information from them that puts the company's purchasing department at a disadvantage. They quickly grasped the consequences: when purchasing gets to the formal negotiations, there's no negotiation left to take place.

Developed by Robert Benedict (a national negotiating specialist), the program consists of a fast-paced videotape, small group exercises, role playing, and other practical training resources. Rather than viewed as an anti-supplier program or a finger pointing exercise to criticize engineers, stresses Cirillo, the training increased awareness of the need for caution in sharing information with outsiders.

Several procurement and engineering staff members participated in the "Back Door Selling" sessions for trainers and they, in turn, have facilitated the training program at many Lockheed Martin sites across the country.

While a common first response to the "Back Door Selling" program was skepticism, the engineers quickly realized its value as a powerful education tool for their team. They discovered the importance of teaming with other internal company functions early in the product development phase. This team approach has paid off in dividends for Lockheed Martin through a renewed sense of common goals and objectives across organizational boundaries.

Edited from article by William Reid, Director of Purchasing Training for Lockheed Martin.

There's more from Dean Foods and Hoffman Engineering about the effectiveness of the "How to Prevent Back Door Selling" program. Many others have comments about this seminar, too.