How to Navigate Rocky Terrain with Your Suppliers Beyond 2021

The 2020s have been one tough decade…and it’s only 2021! When it comes to building strong supplier experience management for the future, procurement needs to rethink our strategies.

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Earlier this year, Procurious and HICX teamed up to bring you the ultimate survivalist webcast: How to Improve Supplier Experience. In it, we discussed the lessons procurement needed to learn in order to achieve optimal supplier experience management (especially when it comes to data), maintain it during whatever crisis we are thrown into next, to rebuild trust with suppliers after a disruption, and to remain a customer of choice. But we’ll let the webcast speak for itself – it’s available on demand, here!

Procurious: How to Improve Supplier Experience | Webcast

But even after our discussions in March, we still find ourselves facing the all-important issue of supplier management. And the missing ingredient to understanding this critical area of management? Well, feedback from our procurement professionals! The team at HICX wanted to hear their thoughts, so they conducted The Supplier Experience Survey. We’ll get to the key findings shortly, but firstly, there’s a fundamental question to be answered. 

How do we rethink our supplier experience management strategies?

And, especially considering this volatile landscape, how can enterprise leaders build resilience into their sourcing and supply chain operations?

We enlisted the help of Chief Marketing Officer at HICX, Anthony Payne, to answer these critical questions:

Examine your approach, thoroughly

This is no time to be tinkering around the edges. “As we transition into the next normal, there is bound to be more change on the horizon, and to be resilient and successful in spite of this uncertainty, organisations need to fundamentally rethink the way they work with their suppliers,” says Anthony. 

The past 18 months have demonstrated that focusing solely on reducing cost and driving towards ultra-lean, low-inventory, just-in-time operations at the expense of all else, leaves businesses horribly exposed to major events. Instead, organisations should adopt a much more supplier-centric approach: the team at HICX refers to this as Supplier Experience Management. 

Get to grips with the concept of SXM

Supplier Experience Management is about two things:

1. Businesses must seek to remove all friction from the relationships with 100% of their suppliers. 
2. Businesses must put data quality at the core of their technology strategy.

To achieve this, you need to put yourself in the shoes of suppliers, Anthony tells us.

“It’s no use expecting suppliers to pivot overnight or to provide immediate responses to risk analysis questionnaires if they don’t know which of the dozen supplier systems they have to log in to.  And businesses shouldn’t be surprised if sellers that they’ve spent years beating down on price are not so willing to go the extra mile to fulfil unplanned PPE order requirements when their order book is already overflowing.”

Encouragingly, we’re already seeing some of the largest and most forward-thinking manufacturers, particularly in sectors such as CPG and FMCG, embrace these supplier experience principles as they plan their technology strategy for the next 10 years.

Take action to get the SXM ball rolling

Based on these twin imperatives of supplier experience and supplier data, we’ve identified seven steps to lay the groundwork for putting suppliers at the heart of your organisation.

Step 1: Identify the ‘bugbears’

“To implement a Supplier Experience Management strategy, you need to create an environment in which your suppliers can thrive, Anthony advises. “First, identify the friction points that suppliers experience when working with your organisation.”

The Supplier Experience Survey revealed that the top three bugbears suppliers typically experience are:

1. The time it takes to resolve queries 
2. Poor communication between departments within the buying enterprise
3. A lack of streamlined business processes 

Other points of tension that need to be addressed, according to the survey, include receiving too little support from the customer, being expected to face too many systems, having to manage unreasonable client expectations and being paid late.

Step 2: Go all in

Collectively, suppliers possess the golden key to unlocking the information, inventory and innovation that business leaders need to be competitive, both in times of stability and within a changing landscape. Therefore, to achieve good data and be competitive, you need to have happy suppliers – across the board.

“What makes Supplier Experience Management such a powerful tool is that it applies to 100% of suppliers, as opposed to only a select few,” says Anthony. 

“While many large organisations have established a Supplier Experience Management program, the trick they are missing is that they’re not maximising the potential of their full supplier base.”

And so, the key to creating a program that improves the experience for suppliers is applying it to Every. Single. One of Them.

Step 3: Face the facts 

The Supplier Experience Survey report found that over three quarters (78%) of procurement professionals rate themselves as being ‘excellent’ or ‘best-in-class’ to do business with. 

However, more than two-thirds (67%) also admit that the time it takes to resolve enquiries is too long and communication between departments is an issue. Furthermore, the average quality score respondents gave their data was 6 out of 10, which is significantly lower than one might expect from a ‘best-in-class’ supplier experience. Uh-oh.

Step 4: Change your mindset

An organisation’s ability to create a better experience for suppliers is underpinned by how they treat them. Suppliers can represent anywhere between 40% and 70% of an enterprise’s outgoings, compared to 10% to 20% for employees. So, they are a huge part of the fabric of a company.

Just like employees, motivated suppliers work harder to deliver above and beyond basic expectations and are easier to retain.

Step 5: Recognise the costs of inaction

Leaving tension points unaddressed with suppliers also presents risks. 

For example, suppliers who face unrealistic deadlines and expectations on a regular basis may experience a high cost-to-serve, which means that the partnership could become unprofitable for them. 

If the supplier experience is negative and it becomes too costly or significantly stressful to work with a customer, there is a chance that suppliers might terminate or decline to renew their contracts! Enormous consequences!

Like employees, the cost of replacing and on-boarding a new supplier is significant, and turnover is disruptive internally. Teams also prefer to work with the suppliers they know and trust. And so, apart from it being the right thing to do, making an investment in maintaining and improving 100% of your existing relationships with suppliers always pays off.

Step 6: Know the benefits

The solution is here! By treating all your suppliers better and actively removing friction, you will help alleviate some of their challenges that might otherwise inhibit progress. What’s more, you’ll free up suppliers’ time and resources, which will improve their motivation for giving the relationship its best. 

Want to take it a step further? If you create a single-entry point for data, this will also improve the level of engagement. Together, these factors create an environment for maintaining good data,  says Anthony.

“By ensuring better data, you will have more transparency into the supply chain, which leads to a more informed leadership team who can take the best possible decisions. In addition, when suppliers have a better experience thanks to less friction and more streamlined workflows, it’s more likely that you will be customer-of-choice. This means that suppliers will be more prone to collaborate on or provide access to supplier innovation, and to provide products in times of constrained supply.”

Step 7: Embrace tech for change

Finally, the enabling factor in implementing a supplier experience management program is… drumroll please… technology!

To create the conditions in which suppliers can do their best work and achieve mutual success, your technology infrastructure must be able to deliver against 3 key principles:

1. Obtaining accurate and complete supplier data based on a Master Data Management model;
2. Utilising technology to deliver a one-to-one supplier experience, where each vendor can access the information and tools they need to work with you effectively;
3. Fully integrating your suppliers’ data, and all their interactions with your company, into your internal systems.

At the heart of it all…

All of this is to say: putting suppliers at the heart of your business will make your organisation more successful. 

It establishes a culture whereby they, the suppliers, can do their best work for you, while data quality also improves. Better data means more transparency, and therefore more resilience in times of crisis. This level of flexibility offers competitive advantage in the longer run, while mitigating short-term risks. With more threats than ever, now is the time to enact these steps.

You can access more key findings from The Supplier Experience Survey here, and watch Procurious’ How to Improve Supplier Experience Webcast here.