Hallelujah you have just been told you won the sale. Now the next challenge is to get the purchase order (PO). Be careful about celebrating too soon, you are not home yet. You would be wise not to include this order against your sales goal at this time. Finally, don’t forecast it yet and above all don’t start production or preparation for shipment. This deal is not done until you receive the PO and in today’s market that can be quite a challenge.
Why POs Get Delayed!
Purchase Orders get delayed for a variety of reasons…here are some of the most common:
- You’re not an approved vendor.
- You didn’t inquire about their purchase process early in the sales cycle and there are procedures that must be followed.
- Your contact doesn’t know their PO process and has not submitted the purchase requisition.
- Your contact is playing “Good Cop-Bad Cop” attempting to use leverage.
- The stakeholders don’t know your order process.
- The contract or sales agreement is not up to date and needs to be revised.
Prevention Strategies for PO Delays
- You’re not an approved vendor. Qualifying as an approved vendor is usually an easy step but it can take quite a bit of time to complete all of the required documentation that is required with supporting data.
- You didn’t inquire about their purchase process early in the sales cycle and there are procedures that must be followed. Learn the PO requirements early in the sales process. Create a flow chart and submit it to your executive sponsor. Ask them to verify the steps in the process. Review the benefits with your executive sponsor, that by performing this critical step early in the process, it will improve the order flow. By doing the work up-front you can ensure they will have your solution in the time frame they need it. Remember POs don’t magically appear, most require multiple signatures before it reaches your hand. Keep in mind that the larger the organization the more complexity in finalizing the deal. Get involved with the strategic procurement team early on and learn their process and requirements. Attention to detail is required and necessary.
- Your contact doesn’t know their PO process. Define the issues that could cause a delay in the issuance of a PO even after a vendor is selected. The most common reasons are: a) new policies/procedures b) consolidation of vendors c) a new ERP system install or d) a negotiation ploy. When capital equipment is being procured, it is not uncommon to encounter a stakeholder that does not know their internal procurement process. Some of the reasons could be that they are new to the organization or their position, policies have changed internally, or other staff is now involved in the decision. Perhaps this is the first time they have had to purchase a product, service or solution for this dollar amount.
- Your contact is playing “Good Cop-Bad Cop.” You know the drill-“we want your product and now that you have won the deal now all you have to do is negotiate with strategic procurement”. The idea is to get you salivating that you are so close to a deal that they can force you to reduce your original price. Be sure to clearly articulate your value early in the buying process and repeatedly. Failure to do so means that you will be viewed as a commodity during price negotiation.
- The stakeholders don’t know your purchase process. Ensure that the stakeholders know your requirements and procedures upfront. Getting a product on time requires that it be ordered, produced, shipped and delivered. For large capital equipment purchases or specialty products this takes time due to the new paradigm of just-in-time manufacturing. Make sure the prospective buyer understands your lead-time requirements, legal review process and shipping schedules. Explain clearly that until the PO has been signed and received, no work can begin.
- The contract needs revision. Ensure your support team is on stand-by. Be prepared for contract changes, last minute questions or unanticipated requirements. Ensure that your support team is available and can respond quickly.
Parting Thoughts
The pathway to the PO can be a landmine filled with unexpected and unanticipated delays, or it can be a step by step approach that is clearly understood by both buyer and seller. Thoughtful questioning and planning won’t mitigate every PO maze but it will help to eliminate a high percentage of unexpected delays. Savvy sellers use rigor and process to their advantage. They also win more deals and have much shorter sales cycles.
