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Understanding The Buyer's
Next Move
The Purchasing Chessboard Model
Do you know the buyer's longer term strategy for the
purchase of your products and services?
In this whitepaper we will use a model normally hidden from
salespeople to illuminate your buyer's next move. It can even
help you to shape your customer's buying strategy/approach.
“The chessboard
is often used as
a metaphor for
strategy...”
The Purchasing Chessboard
Finding the best procurement strategy for your products and services
is something that buyers are approaching in an increasingly scientific
manner. Nowhere is this clearer than by reference to Purchasing
Chessboard model.
AT Kearney's Purchasing Chessboard is the ultimate in buying tools. It
helps buyers to set their buying strategy for a chosen product, or
service category, including;
 The attention it should be given.
 The sourcing approach to use.
 The importance of price and non-price variables.
 How suppliers are to be treated.
The level of sophistication of the Purchasing Chessboard goes far
beyond that of almost any other model. In fact it extends to a total
64 strategies, or approaches to further organizational goals through
optimum procurement choices. For the seller it is a complete map of
the buyer's options.
The Purchasing Chessboard is a powerful tool in the hands of a
professional buyer. It is equally powerful in the hands of a
salesperson. For the seller who is familiar with the model, it offers a
means of anticipating and matching the buyer's next move.
Buying And The Game Of Chess
The chessboard, so often used as a metaphor for strategy, views
procurement 'in the round', seeing it is a complex strategic function
deserving of the same degree of analysis and planning as any other.
Sellers will be delighted to know it's role extends well beyond the
quest for lower supplier prices.
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The Chessboard recognizes that the approach of the buyer should be
both market and strategy dependent. It therefore plots the various
goods and services to be bought on a grid with the following axes:
 Supply power
 Demand power
Finding out where a supplier and his, or her products fit on the matrix
requires a bit of strategic thinking. It involves Porter-like
considerations of strategy such as;
 Switching costs
 Availability of substitutes
 Concentration of suppliers
 Barriers to entry
 Proprietary technology
 Bargaining power of buyers.
Those familiar with the 5 Forces model and the Value Chain (popular
tools among strategist) will see the model's approach as further proof
of just how strategic procurement has become.
The 4 Key Procurement Strategies
Once products, or services are placed on the chessboard matrix the
four strategic procurement choices available to buyers are revealed:
1. Manage spend is recommended where supplier and buyer
power are both low, leading to the identification of strategies
such as; demand management, volume bundling, co-sourcing
and mining commercial data.
2. Change the nature of demand is suggested where the balance
of power is in favour of the supplier. This can, the model
suggests, be achieved through; innovation, re-specification, risk
management and mining technical data.
3. Leverage competition among suppliers is the recommended
strategy where the buyer has the power over suppliers. The
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“The Purchasing
Chessboard gives
sellers up to 64
potential moves.”
model then suggests tendering and global sourcing strategies,
as well as reviewing and enforcing supplier prices.
4. Seek mutual advantage with the supplier is the recommended
approach where both supplier and buyer power are high. The
Chessboard offers a menu of choices that include; cost
partnership, integrated operations planning, value chain
management and value partnership.
These above descriptions are just a snapshot, with the model going
well beyond the 4 generic strategies to get a whole lot more
prescriptive. Indeed, it offers a menu of 16 approaches for each
generic strategy. For example in respect of managing spend (the low
buyer and low supplier power quadrant) the buyer can drill down to
the next level that includes a menu of such options as:
 Demand reduction
 Procurement outsourcing
 Buying consortia
 Contract management
 Standardization
 Supplier concentration
 Spend transparency
 Bundling purchases
 Closed loop spend management.
The Chessboard Reveals The Complexity Of Buying
The tools, models and frameworks used by a buyer reveal a lot about
how they buy, in particular the level of science and sophistication
applied to the purchase decision. The Ferrari of such models is the
Purchasing Chessboard by AT Kearney Consulting.
The Purchasing Chessboard is similar to other portfolio models in that
it uses a grid. For example while The Kraljic Model has 4 strategies, the
Purchasing Chessboard has a sum total of 64 potential moves. The
difference between them is partly explained by the fact that almost 30
years separates the two models. The complexity of the global supply
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chain of the modern economy could only have been dreamt about by
Kraljic in the 1980s.
The Purchasing Chessboard is a visible demonstration of the
complexity of modern buying. It is the appliance of science and
strategy to purchasing decisions. It reveals how procurement is
increasingly; formalic, category driven and strategy led.
Those buyers using the chessboard are likely to be in the top 10-15%
in terms of procurement best practice. But it has even greater
potential to distinguish salespeople using it from the rest of their
colleagues.
How Can Sellers Use The Chessboard?
Sellers need to help the buyer to recognize the
needs of their category and to adopt the right
strategy for their goods and services. They also
need to know the range of options available to
buyers and they need to remind buyers of
them from time to time. An understanding of
the Purchasing Chessboard can help in this
regard.
Savvy sellers can use the model to refine their
proposition or source of value based on the
levers and methods appropriate to their
quadrant on the buyer's chessboard. That gives
sellers a menu of up to 64 strategies that they
can connect with through their proposals and
pitches.
One of the greatest uses of the tool for sellers is
that it puts price negotiation in its proper context.
It highlights 64 ways for the buyer to achieve what he wants and the
majority of them have nothing to do with price. It encourages buyers
to focus not just on the obvious (sometimes dumb) strategies of
pitting suppliers against each other, or endlessly re-negotiating price.
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The Science Behind This Paper
These insights and tools are based on:
1. Buyer Research – our ground-breaking research into how modern
buying decisions are made and the implications for sellers.
2. Best Practice Research – Over 1 million pages of best practice
sales case studies, books and research.
3. Common Practice Research – Our peer comparison benchmark of
1,000s of your competitors and peers.
The Sales Engine® and SellerNav are trademarks of The ASG Group.
The entire contents of this document are copyright of The ASG Group and cannot be
reproduced in any format without written permission.
Want help in tackling your sales challenges? Contact
[email protected]
www.theASGgroup.com
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© The ASG Group 2012