The Secret of Successful Supplier Selection
Still using cost as a primary criteria for supplier selection? Our latest webinar shares all the secrets you need for success.
Have you been tasked with running a selection process for a new supplier but don’t know where to start? Perhaps you’ve been using the same routine for years but feel it’s time to freshen it up? Are the old ways just not delivering the outcomes you need?
In our recent Procurious-Ivalua Webinar, Critical Success Factors for Supplier Selection, our panel of experts revealed the secrets to how they get the outcomes they want from their sourcing processes.
Here are five great take-aways from that discussion.
Supplier Selection – Get the Balance Right
Our panel reported that many organisations are not yet on a path that leads away a cost-driven focus. Tech tools that are available to help with future cost modelling mean procurement can go to the market with uncertainty about this type of risk reduced. When cost risk is managed this leaves the way clear for the road to value.
A great example quoted in the discussion was a utility contract. The focus was on value rather than cost. It led to costs being reduced and also meant a more sustainable outcome was delivered. This lowered usage and introduced measures to promote sustainability.
Can you introduce a selection process that balances cost, value and your organisation’s wider sustainability goals to select a supplier who is right for you?
Remember, One Size Doesn’t Fit All
Making sure a supplier is a good cultural fit for the organisation is a key requirement that all our panel members stressed. Think about the impact of a cultural misalignment on your organisation’s reputation or brand.
Cultures vary across the world and getting a cultural fit when you’ve got a global supply chain is hard. However, there are many things on which the buyer and supplier can agree. How about meeting with your supplier’s leadership team as part of the sourcing process? This would allow you to assess their management ethos to make sure that the cultural fit is there right from the start?
The unknown unknowns
Managing external factors and risks, particularly those that are not yet known, are something that supplier selection process is often expected to address. All panel members reported the challenge of grappling with the unknown unknowns in the current period of global upheaval and change.
The advent of technology-driven real time data is something panel members welcomed to manage supplier and supply chain risk. It’s also a great way to check and monitor supplier financial health.
Make use of the new tools that are available to ensure your organisation is prepared and have a backstop position to allow a response when situational or supplier risks change.
Be a customer of choice
When it came to the supplier-buyer relationship our panel had very clear advice. Whether we’re a supplier or a buyer, we’re all looking of a return on the investment in the relationship we’re about to have. Focus clearly on the outcomes both sides are trying to achieve.
Make sure you put yourself in the seat of your supplier’s sales director – how can a contract with your organisation provide a supplier with the opportunity for fair value earnings or a sustainable revenue stream?
Start the conversation
Changing the way your organisation selects suppliers will not happen overnight. When you’re engaging with stakeholders our panel advises you to talk in their terms not the language of procurement.
Will the change you’re proposing add value? Why will it improve customer experience? Why could it safeguard or improve reputation?
So, go ahead and pick one of the secrets that the webinar panel shared as being critical factors for success and start that conversation with the business today.
A recording of the Procurious-Ivalua Webinar – Critical Success Factors for Selecting Your Suppliers – with panel members Gordon Tytler, Rolls Royce, Stephen Carter, Ivalua, Fred Nijffels, Accenture and host Tania Seary, Procurious is available here.
