How to Improve Supplier Experience (and Why)
The 5% saving you can extricate from a supplier isn’t the only value forthcoming. In fact, if they’re enjoying the experience, they may bring the value to you.
The sign of a great relationship is not only knowing what you need, but how to ask for it. Last year, those supplier relationships which lacked visibility and supplier information corresponded with supply chain hiccups. In many cases these lead to major catastrophes.
Critically, while we knew who supplied what, we simply didn’t have the kind of relationship where we could ask for what we needed – and we often didn’t even know who to ask!
Our suppliers are now more geographically scattered than ever, and managing products and services has become increasingly more strategic. As such, the risk and cost of managing third parties are increasing dramatically. The need for better supplier data is more important than ever – beyond it having its COAT.
As digital technologies like AI and Machine Learning become more sophisticated, so does their appetite for useful, good-quality data – way beyond the limitations of manual processes involving email and Microsoft Excel. The costs of using poor quality data don’t bear contemplating … so how can we efficiently harvest such valuable data?
Getting to Know You
Quite simply, suppliers will give it to us … provided we have established the proper relationship.
“We used to focus on, say, 50 key suppliers, but the focus can no longer be only on them” explains HICX CEO Costas Xyloyiannis. “All of our suppliers need to be satisfied, so we need to make life easy for them: frictionless onboarding, simplified data management, self-service kiosks, open communication channels – and don’t make them duplicate work.”
He compares the value of squeezing a 5% saving from a supplier with the ongoing value of nurturing a relationship where suppliers actively want to do their best for you. “Why are not all suppliers equally important already?”
Amy Fong, Vice President of Sourcing and Vendor Management at Evererst Group, agrees: “Look at how your providers touch your employees, internal stakeholders and in many cases your end customers!
“Procurement is now looking at supplier management through a different lens. It is no longer a case of only seeking better prices, beating suppliers down and squeezing them as much as possible. Procurement today is becoming more strategic, rather than tactical.” The aim is shift from the mindset of, “what can I as a customer get out of the interaction” to “how will both parties mutually benefit from interactions?”
Is everything alright?
Amy sees a shift from the Service Level Agreement to the ELS or Experience Level Agreement (sometimes also called an XLS). “Best-in-class organisations are recognising that if their suppliers are really successful, then they are going to be very successful – and it’s this idea that’s absolutely key to supplier experience management. An ELS measures not just what levels of service you provided to a customer, but also the experience of that customer,” she explains.
Costas adds that that involves treating all suppliers as true partners, then setting them all up for success – “even if this seems counter-intuitive to a seasoned Procurement professional where savings are concerned.” When an organisation emphasises employee or supplier experience, it will be seen as an attractive organisation to work with, especially in the gig economy,
Amy also believes we need to be thinking in similar ways within the procurement space, “whether it’s end users, budget holders, executives that we’re supporting … it’s so important to think about, ‘are we driving the needs of the business?’”
As for putting supplier experience at the forefront, it is “really about how we can increase the collaboration with our suppliers and make sure that they are part of the ecosystem and that we work in partnership together.”
Measure for Measure
Once you establish a productive working relationship, how do you measure your suppliers’ experience levels?
An NPS (Net Provider Score) is traditionally used for customers but can be flipped for a supplier. Surveys can also be useful – but bear in mind that trust is the key ingredient: without it, a supplier will hesitate to provide honest feedback for fear of losing business!
“A lot depends on what results you’re trying to drive,” explains Amy in our Supplier Experience webcast. “Whether you’re helping your suppliers be more innovative, drive new ideas, minimise your own risk, develop future opportunities, manage performance or increase quality and service levels – will determine what your scorecard will look like.”
Amy also advocates for a 360-degree process: “admit what you could have done better, and the feedback is more likely to be forthcoming.”
A Bountiful Harvest
Costas outlines three major use cases (and benefits) for supercharging your supplier information:
- Enabling better management of collaboration with suppliers
- Sharing information with suppliers and working together on action plans
- Driving higher rates of innovation with suppliers
HICX’s pioneering research and technology provides a means for suppliers to engage frequently, like a central communication point for the customer to reach out to their entire supplier ecosystem. “With these portals come self-serve capabilities where suppliers can manage their own data – which immediately ensures it is better-quality data,” explains Costas. “It becomes a win-win situation: one where the supplier is happy to do business with your organisation.”
The process ameliorates the integration of Sustainability aims. “When you plan to build some processes within the tool so that we can share information with the suppliers, they can send us information about their sustainability journey and we can send them feedback about where we stand – and where they stand as a supplier in that journey.”
Costas also emphasises the importance of keeping Sustainability focused: segmentation is key to doing it right. “Communicate on its importance, since suppliers in different regions and juristictions won’t have the same priorities or understanding of your vision. Some may see it as a cost.”
Amy recognises that the definition of “Innovation” depends on the category. “[It] could mean an opportunity to employ new technology; more efficient processes; cost savings – even a subtle innovation may ultimately delight customers. Be up front about the kind of innovation your organisation needs and the success is shared. We’ll all win together.”
But both Amy and Costas strongly caution that Innovation is not free! An Innovation fund is strongly recommended. “Leave room in your agreements and budgets to innovate” Costas cautions, lest suppliers who are feeling the squeeze simply take the path of least resistance, bypassing a more innovative solution.
Further, “build opportunities for the right people to connect beyond setting up supplier relationship meetings on operational performance and business terms. Are you getting the thinkers in the room?” While it may take a lot of trust, it is definitely possible to orchestrate.
Such sophisticated technology as that which HICX provides will allow productive supplier relationships to flourish, useful data to be harvested, communication to flow and for feedback to be considered. It’s not just a win/win situation: it’s an ongoing win/win partnership.
Catch the invaluable discussion on Supplier Experience as Amy Fong and Costas Xyloyiannis join Tania Seary in our exclusive HICX webcast: register here for free
