Are you annoying your suppliers? Hear what suppliers really want from you!
All too often buyers find themselves landing in the exploitatable zone – what’s worse: they don’t even know they’re in it! It’s time to stop being a nuisance and deliver your suppliers what they actually want.
Picture this. You’re in a meeting listening to a senior executive describe that your organisation’s business is the most sought-after contract in town. Your exec says that suppliers are chomping at the bit to win this contract. Meanwhile, you’ve just completed a quickfire round of informal market research and know that suppliers think the opposite.
Naïve Buyers are a Risk
Why does it matter when an organisation misunderstands its position and perception in the market? A naive buyer that thinks they are core business to their suppliers when they are not means that they could be taken advantage of. This lands the organisation squarely in the exploitable box in the supplier preferencing model below. It’s probably easy money for the supplier, but often cash cows can still be annoying.https://www.procurement.govt.nz/procurement/guide-to-procurement/plan-your-procurement/positioning-yourself-in-the-mark
Naïve buyers are annoying to suppliers
Our exec described above probably expects top treatment; regular meetings, oodles of dashboards, bulk discounts and is probably the type of person that doesn’t process an invoice for 4 months. Nightmare.
Naïve buyers don’t right-size the contract
A lack of self-awareness can lead to an overcooked approach when it comes to finding the right procurement or contract model for a project. A red flag for this behaviour is when the business owner is pushing for a large-format contract like “strategic partnerships” or “alliance” or “outcomes based head agreement”, when actually all that is needed is a simple short-form services agreement. Or, if it’s a box of pens, even a simple purchase order would do! There’s no need for a formal signing ceremony and a selfie with the CEO if you’re just buying stationery.
Naïve buyers don’t build a relationship with the supply market
A savvy procurement pro can get ahead of these situations by holding a relationship with their supply partners and, better yet, designing a commercial eco-system that suits them both.
Supplier empathy describes the ability of a buyer to put themselves in the shoes of their supply partners. It articulates the ability to create processes and contracts that work for both parties. In an industry that is centered around relationships – building your supplier empathy muscle is a critical skill.
Understanding what your suppliers want from you isn’t complicated and it often comes down to basics.
5 Things Suppliers Actually Want From You
The executive who thinks they are the bees knees would probably design a complicated SX (Supplier Experience) maturity framework. Before you go down that path make sure you’ve ticked off the 5 basics – your suppliers will thank you for it.
- Provide a contact point inside your organisation and a face to a name.
The contact person inside your organisation must be relevant, know the commercial landscape and have the authority and confidence to discuss the contract.
- Publish project pipeline
Details of upcoming projects are critical! There must be enough information to allow for adequate planning e.g. location and type of procurement, the funding envelope if appropriate, and the date when the procurement is likely to commence.
- Ensure tender processes are streamlined
There is a lot of paperwork and red tape when it comes to procurement tenders but often we’re our own worst nightmare. Make sure the tender is as clean and as simple as possible. The cost of tendering is incredibly high and this is often not taken into consideration when tenders are being written. Only ask for what is needed.
- Choose contract models that are right-sized to the risk
Think carefully about the risk of the project. What are the critical issues that could be catastrophic if they go wrong? What type of relationship do you need for these goods/services? Keep it simple wherever possible.
- Have meaningful two-way feedback throughout the contract
One of the 7 deadly Procurement sins is the set and forget mindset. The contract is signed so procurement dust off their hands and crack on with the next project. Whilst the ongoing management of the contract may not be procurement’s responsibility, it is the responsibility of the procurement function to ensure there is adequate contract management and supplier relationship management training, framework, tools, policies and reporting. If all else fails, pick up the phone with the supplier and ask how you are performing as a buyer.
What positive supplier relationships have you experienced and what made the dynamic successful? What are the other basics that we could improve on?