E-mail: Another way to get in back door

By Staff -- Purchasing, 2/22/2001

Backdoor salespeople have discovered another way to approach purchasing's internal customers: the Internet.

Backdoor sales ploys are not new. Salespeople have long tried to get around established purchasing policy to reach potential end-use customers. "There is always the sales rep who tries to solicit his product to end users or departments not responsible for supplier selection," says Mark Wright, purchasing manager, Praxis Industries Inc., Savannah, Tenn.

Typically, many of these sales pitches are delivered by telephone. Now, salespeople are using e-mail promotions to sell computer equipment and software directly to engineers and IT managers.

Few companies are immune. Nearly every corporate buyer responding to a recent PURCHASING Magazine survey says technology suppliers are using all sorts of techniques from the tried and true to the brand new to try to entice end users into buying their goods and services. These backdoor salespeople ply engineers and other unsuspecting product end users with offers of dinner, tickets to sporting events and other gifts, contacting them by telephone and, increasingly, e-mail to pitch their wares. In some cases, they go so far as to "package a [software] system with a machine."

"Phone calling other departments requesting 'meter readings' on our equipment," is how salespeople attempt to get in the back door at Penn-Plax Inc., Garden City, N.Y., says Warren Stricoff, purchasing manager.

They "call someone in the data processing and engineering departments, or the plant manager, and arrange an appointment and/or lunch," says a PM in North Carolina. "They usually try to reach data processing before contacting purchasing," adds Joyce Danneffel, buyer, Modern Plastics Corp., Benton Harbor, Mich.

"They try to circumvent the bid process," says Susan Stewart, procurement manager, Hoosier Lottery, Indianapolis, Ind. "It doesn't work."

Once these backdoor salespeople contact user departments, they try to convince the unsuspecting that the company can't do without their products. Still, many corporate buyers say they've been successful at thwarting these efforts. In many cases, they work to enforce established purchasing policy, oftentimes refusing to pay for items bought without their involvement.

"If they do contact us, our policy is to have the end user/receiver report it to purchasing ASAP!" says Stephen J. Siegel, purchasing manager, Alfa Laval Thermal Inc., Lykens, Pa.

"It doesn't happen often because payment is refused, the product returned, and the supplier put on alert," says Joel Barry, corporate purchasing manager, HNC Software, San Diego, Calif.

"...Our company policies are usually adhered to, which means nothing gets purchased unless purchasing has been involved," says a purchasing manager in Indiana.

"Most sales pitches come through the purchasing department or are referred to the purchaser from other departments," says Don Benson, purchasing manager, ISI Infortext, Schaumburg, Ill. "All managers know they can't order anything."

"All the companies we deal with do not attempt to bypass our policies," says Dale McAlexander, purchasing manager, Tyden Brammall, Angola, Ind.

Get involved

Corporate purchasing managers are finding that involving product end users in the buying process helps to stop these backdoor salespeople from infiltrating the organization.

"We have implemented 'MERs' which means 'major equipment requests' which must be cleared at the general manager or vice president level," says a respondent from Michigan.

"We have started involving the product end users in the procurement process," says Wright of Praxis Industries, "involving budget requirements, maintenance agreements and software requirements."

"Sent memo to all internal departments informing them that only purchasing can authorize information on equipment," says Stricoff of Penn-Plax.

"We work closely with company managers to stay involved with their needs," says George Douglas, purchasing manager, Innovation Sports, Foothill Ranch, Calif. "Most managers are willing to cooperate. The salesperson is the instigator."

"We have established a purchasing task force consisting of a purchasing manager from each of our regions. This is an area that we are addressing and it's beginning to get some attention from upper management regarding purchasing's ability to negotiate better deals and programs that will result in major cost savings," says a purchasing manager in North Carolina.

"If it is not ordered by purchasing or with a company credit card we might refuse to pay," says Laurie McGehee, buyer-central purchasing, Autoliv, Aurora, Colo.

Internet as buying tool

While backdoor salespeople have not been very successful at selling their wares directly to end users via the Internet, corporate purchasing managers see potential in use of the Web as a buying tool. In fact, 75% of survey respondents see use of the Internet in the organizations to acquire computer equipment and software growing.

"The Internet is a terrific tool for selection and specifications," says Barry of HNC Software. "Buying online is efficient for the entire spend cycle (purchasing, receiving, accounts payable). We plan to continue to expand Internet-based hardware/software purchases."

"The Internet offers great ability for product investigation before the actual purchase," says Wright of Praxis. "There is also liberty to contact suppliers outside the normal sphere of business to get information or even quote materials."

"I think it could mean lower prices and access to newer equipment without the wait for catalogs," says a buyer in Michigan.

"As the Internet gets friendlier to use, it will become a natural choice," agrees Douglas of Innovation Sports. "We also need to build trust that the online suppliers are legitimate suppliers."

Others not as excited about the possibility of the Internet are managing long-term relationships with local resellers that they see value in maintaining. Benson of ISI Infortext says, "We prefer a personal, local relationship for the purchase of computers in order to maintain control of standards." Another purchasing manager in Indiana agrees, "We have a corporate account with a major computer manufacturer. All computers are the same brand."

Others simply are not ready for Internet buying. Says a buyer in Washington, "We get information there, but my company is stuck firmly in the Dark Ages. No Internet buying is permitted due to accounting concerns."

"We don't currently purchase these items over the Internet," says a senior buyer. Acquisition "is controlled through purchasing via POs."

Supplier management skill

Fifty-seven percent of buyers responding to the survey are involved in the technology purchase at their companies. At these companies, management looks to purchasing for its skill and expertise at managing costs, negotiating agreements, and working with suppliers.

"Purchasing has the expertise to negotiate the best deal and looks at the whole picture instead of just one product," says a purchasing manager in Indiana.

"As liaison to the company, we see suppliers from all areas of this industry, not just a few," says Siegel of Alfa Laval Thermal.

Of the buyers who are involved in the technology purchase at their companies, 79% say their involvement is growing.

There are many reasons why purchasing is taking on a bigger role in the technology buy. Among them: business expansion.

"The company has grown," says Barry of HNC Software. "Purchasing's role has expanded." A purchasing agent in Pennsylvania concurs: "More systems are being purchased."

Other respondents say management at their companies has changed its thinking about the IT buy: "Because there were so few suppliers, IT used to be ordered at any cost," says Stephan Winkler, associate buyer, ITT Industries, Auburn Hills, Mich. "Now with more players in the market there is room for leveraging the purchase. The IT industry grows and competition increases."

"The company is more diligent in its purchasing," says McAlexander of Tyden Brammall.

Still others cite technology changes or advances as reasons for greater purchasing involvement.