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Connections in a World of Strategic Procurement
- 5. Shift your relationship with customers from contract based to a partnership. Building a Strategic Alliance
Editor's Notes
- We know that companies that export do better, and that connections are critical to exporting. But before you start looking for partners, there are some important steps to take to make your search for connections productive.
- We offer this advice, but I’m speaking with you today, because we have also taken a look at our own business. I work for Export Development Canada, a crown corp madated to create capacity for Canadians to trade more. I always explain what EDC does, because I know to never assume someone has heard of us. We see this as a problem, if we are a Canadian crown corporation we need to be more relevant to our market. Something new that we are doing is leveraging our financing relationships that we have with large, investment grade international companies, and developing new relationships within their procurement groups. Before you reach out to partners, begin with research, knowledge gathering and analysis of your company, your industry and your Canadian customers. Know what makes your company competitive Why do your customers buy from you Why do they keep buying from you Identify promising international markets that might hold opportunity and research how they work – look both inward and outward – to understand your opportunities for growing your business. <sector customization should occur here, e.g. - Auto: Need to explore markets where OEM’s and Tier 1’s are investing in manufacturing and assembly – you won’t get a contract if you are not localized. >
- Recently at a conference where Terry Matthews spoke, Terry is from Kanata, started 300 companies, and his advice – Do what your customer loves...AND will pay for I love this because it speaks to not just what you do, but the equal importance of closing a sale. With strategic procurement, this couldn’t be more true, what your customer loves is one thing, what procurement has approval to buy may be different. When you are looking to grow your business globally you need to know your value proposition, you need to have mastered that elevator pitch so that no matter how long you have, or how much of a language barrier might exist, you can quickly articulate why someone should do business with you. But – to really know your value proposition, you need to understand who you are selling to and how they buy. <sector customization should occur here, e.g. - Auto: Determine if you sell directly to OEM, Tier 1, Tier 2, Tier 3, etc.>
- There can be a difference between corporate strategy and procurement strategy, and it helps to understand both for your customers. Procurement strategy = winning RFPs but Corporate strategy = future opportunities. For example, in auto, VW has annouced a strategy moving to an all Electric Vehicle lineup, however, current procurement strategy is still local suppliers/price competitive. Consider selling directly to end users if your products are expensive and have complicated and lengthy sales cycles. Why? You’ll need to deal with the company personnel who use the product and various other people involved in the decision-making process. Also, complex and/or highly customized products are best handled by a sales force that can deal directly with the end user. To succeed you’ll need to know the international market very well, and how to engage with the people in it. < sector customization should occur here in “WHY”, as “complex and/or highly customized products” may not be relevant >
- Own your function rather than just your contract, allows you to compete on more than price Build your relationship, CI goals, problem resolution systems…
- This strategy of matching procurement needs with Canadian expertise is very successful. We’ve put loans in place in 47 countries to support Canadian export trade for more than 5,000 Canadian exporters. More than 85% of those exporters are small- to medium-sized enterprises. Where we’ve seen success Innovative solutions – improve UX, reduce costs Timing! Big events are great networking opportunities, inbound missions provide opportunities for buyers to see
- You’ve laid the groundwork with thorough market research, and decided whether you’ll sell directly or indirectly. Now you’re looking for customers and partners. In this section we’ll discuss four different ways of connecting with decision makers, with examples from Canadian companies, and ways that EDC can help open doors, including: 1. Online introductions – ECN 2. In-person introductions – Trade shows 3. In-person introductions – Missions 4. Introductions to large EDC customers Of course, we cannot guarantee that you’ll find connections through these methods, but they are a good place to start.
- Trade shows and other events let you engage with an interested and captivated audience, raise awareness, educate, build relationships and meet new potential customers. Working alongside the Canadian Trade Commissioner Service, EDC facilitates global trade creation through introduction matchmaking at events like trade shows both in Canada and abroad. Before you attend a trade show: Do your homework – check out the list of trade events and info about specific trade missions on the EDC website. EDC’s Find Export Opportunities page offers additional resources Review the list of exhibitors and attendees, identify whom to meet Plan meetings in advance Reach out to Canadian trade associations that may be exhibiting Overall in 2015, EDC sponsored and led 26 matchmaking events. These resulted in 1,160 introductions between 133 foreign buyers and 450 Canadian suppliers, most of which were SMEs.
- Katch Kan is an Edmonton-based company and a good example of how introductions can pay off. Katch Kan provides the global oil and gas industry with specialized products that help protect the health and safety of oil rig workers, minimize pollution and reduce operating costs. The company’s challenge was to create strong international growth, and to do that it needed opportunities to find the right strategic business partners and develop relationships with them.
- To make connections, Katch Kan participates in major oil and gas trade shows around the world and makes extensive use of EDC assistance. David Nygaard, Katch Kan’s business development director, says EDC has helped open new doors to the U.S. market and its supply chains. And, Katch Kan is also working with EDC’s U.S. and Mexican representatives to develop more contacts and relationships. Katch Kan’s two flagship products are exported to more than 60 countries, a success due to the strength of the product line, a continued focus on R&D, innovation and custom solutions. But the company’s success is also linked to NAFTA, which gives Canadian exporters an edge over non-North American competitors in the United States and Mexico. Those connections with U.S. and Mexican reps, made via introductions or matchmaking events, were therefore even more important. As Katch Kan’s David Nygaard can attest, trade shows are an important way to bring Canadian and international companies together, and through these shows, EDC can help you meet and work with trade commissioners, provincial and federal partners and potential customers.
- Like trade shows, missions bring together Canadian and international companies involved in trade. EDC, the Canadian Trade Commissioner Service (TCS) and other provincial governments and associations partner to organize Canadian outbound trade missions overseas and inbound missions. For example, the mission to Colombia and Peru: Renewables Mission for the Extractive and Utility Industries will include executives from leading Colombian and Peruvian oil and gas and mining companies, and some of Colombia’s largest multi-sector utilities. Of course, you may not always meet the “right” person at a mission, but you will have opportunities to network and to open the door to discussions with the right person. Again, this mission is just one example of many missions that take place and may be relevant to your business.
- Another way we help Canadian exporters – particularly small businesses – is through introductions to large, targeted international companies with procurement needs that match Canadian expertise. We provide those international companies with loans in order to open the door to possible relationships with Canadian suppliers. Then, in collaboration with Global Affairs Canada (formerly DFATD) and the Canadian Trade Commissioner Service, we introduce decision makers from the international companies to qualified Canadian suppliers, often through missions. A couple of examples of targeted international customers include Mexico’s state-owned petroleum company, PEMEX, and India’s Tata Group. The key, of course, is to tailor your message or pitch to the buyer you are being introduced to at the mission.
- Our research shows that companies with operations abroad tend to be more innovative, productive and competitive than companies that stay home. Setting up operations overseas allows you to grow by expanding into new markets, to be closer to your customers and to lower the costs of transportation and labour. It can also improve your competitiveness within global value chains, help you gain access to new supply chains, and gain access to new technologies and resources. And, for the past decade, sales from Canadian international operations have grown twice as fast as Canada’s direct export sales. Let’s look at an example of a Canadian company whose operations overseas have brought it significant success. < sector customization should occur here, e.g. - Auto: Investment abroad is a very significant part of automotive company’s growth strategy. >
- B.C.-based Endurance Wind Power initially set up a manufacturing facility in Surrey, British Columbia. Its challenge was to finance the acquisition of foundational technology and to grow its business. The company knew that in order to grow, it needed to have operations overseas so it could be closer to its European customer base. EDC helped Endurance first with financing that allowed it to acquire the world-class foundational turbine technology platform on which it’s built its business, and then to access the funding needed to establish its operation in the United Kingdom.
- Endurance has made a name for itself on the global stage, providing wind turbines to farmers and other small enterprises. It’s also grown and diversified from being solely an equipment maker to an energy reseller, using its own technology to generate power and sell it to customers. From a team of 10 in 2008, and with support from EDC, Endurance has grown to an enterprise of more than 150 employees and deployed more than 750 turbines throughout the United Kingdom, Italy, Canada and the United States. And Endurance is considering new opportunities in other parts of the world.
- Canadian companies like Endurance who are setting up operations outside Canada do face challenges, from financial capacity and protection against risk to finding good data about local business environments. EDC can help. We can increase your company’s financial capacity (as we did for Endurance); protect against new commercial and political risks; and find the information you need about the local business environment (including investment, legal and tax requirements), potential business partners, local suppliers, distributors and legal counsel through our network of on-the-ground representatives. We have contact information for five market experts in each country on a growing list of countries so your first five calls help you get a strong foothold in the market.
- Exporting has a very positive impact on Canadian companies and the Canadian economy – exports amount to more than 30 percent of Canadian GDP. EDC has helped businesses all across Canada grow all over the world – and we can help you.
- In 2015, we supported business in 170 countries, facilitating $104 billion in global business transactions, contributing $66.8 million to the GDP and supporting 530,839 jobs across Canada.
- There is an ecosystem of organizations that help exporters in Canada. They each have specific roles they play, and share others. ECD helps exporting businesses with insurance, bonding, investing in operations abroad and setting up affiliates. Working alongside the Trade Commissioner Service (TCS), EDC can offer help with market knowledge, making connections with partners and prospects, and assistance guiding you through government programs. TCS also provides more in-depth market intelligence. Both BDC and EDC can help with financing and finding international contacts. BDC also provides marketing and business planning and consulting. The Canadian Commercial Corporation manages contracts with international governments, plus they provide general support such as export planning, financing, and support going to market. EDC can help you get started and figure out which organization is best suited to your needs.
- Once you’ve made overseas connections, we can continue to support your company’s growth and help protect your business. In addition to assisting you with overseas connections, we can also help Canadian exporters with credit insurance, financing, and market knowledge.
- If your company is ready to export, we’re here to help you: Network and make connections with the right international customers and partners online, and at trade shows and missions Work with targeted international companies whose needs match your expertise Set up operations in international markets to grow your business Connect directly with key experts in markets around the world