The current climate has made it more important than ever for suppliers to see you as their most highly prized stakeholder – but how do you compete in a sellers’ market?
Marketing, communications and engagement – traditionally these aren’t words one would associate strongly with procurement. Yet over the past few years procurement and supply chain has been thrust into the spotlight like never before, with the war in Ukraine, Covid-19, lockdowns in China, shipping delays, commodity shortages, insolvencies and price rises being just some of the reasons. As a profession, it is important to capitalise on this opportunity, to embrace the spotlight and positively influence and impact organisations.
At the same time, however, the fall-out has made many people’s jobs more challenging. In addition, certain industries are experiencing unprecedented demand for the top suppliers, coupled with a shortage of skills, capacity and resources. This environment is affecting suppliers’ appetite to tender and has created a sellers market in some sectors. As a result, suppliers can be a lot more selective of who they choose to contract with. Therefore, procurement and organisations need to seriously consider how they can attract the best suppliers to meet their needs.
Supply chain expenditure as a percentage of turnover can vary significantly depending on the organisation and often ranges between 50-75%. Consider this in terms of the importance and criticality of suppliers and their contribution to an organisation’s operations. Suppliers should be viewed as fundamental stakeholders and extensions of an organisation who need effective communication and engagement, in the same way as the organisation values employee or customer communication and engagement.
Become a client of choice
Supplier relationship management (SRM) can yield significant benefits when managing the top-most critically important suppliers. Taking this further, a strategic and collaborative approach that unlocks value with the most critical suppliers is a concept all should embrace; and in the right situations, a long-term partnering approach could be considered. For many companies, strategic supplier management still has untapped potential to reduce costs, improve quality, speed up innovation, improve customer satisfaction and, ultimately, impact the bottom line.
All business leaders want their organisation to be well-positioned in the market and known as a ‘client of choice’ or good to do business with. Because if you are considered a good client or customer, suppliers are more likely to value working with you, tender competitively with the best prices and resources, and commit to delivering on desired outcomes. It’s important to plan what you can do to put your organisation in the best possible position to appeal to suppliers.
Broaden communications and engagement
- Collaborate with relevant industry or trade associations to create awareness and build new relationships
- Apply for industry awards to showcase your organisation’s abilities
- Communicate the organisation’s challenges or problem statements, and focus supplier R&D on the areas you need help
- Publicise the organisation’s environmental, social and governance (ESG) credentials
- Have dedicated website space for suppliers with genuinely useful and up-to-date information
- Use social media to showcase supply chain best practice, share case studies and tender opportunities
- Publish tender opportunities or the pipeline of future work
- Consider innovation challenges, competitions and sprints to encourage SMEs into the supplier ecosystem, and
- Produce periodic newsletters to update interested suppliers on relevant organisational news, priorities, successes, case studies and opportunities.
Focused communication and engagement for existing suppliers
- Hold annual supplier recognition awards
- Host regular supplier forums to communicate key business updates
- Obtain feedback on how to improve by using supplier perception surveys
- Open communication channels for two-way dialogue and feedback, and
- Produce joint case studies, marketing or industry award applications.
Finally, the human element of relationships cannot be ignored, as well as the benefits face-to-face meetings offer in terms of familiarity and organic information sharing through conversation. However, this comes with the challenge of time, resourcing, probity considerations and, ultimately, cost.
These are just some of the channels to try when considering how to improve your market position. The benefits are plentiful and include greater alignment on goals and strategic direction, focused innovation and co-creation, solutions for challenges and problems, greater collaboration and transparency, faster communication, and, for the purists, a positive impact on the bottom line can be realised from lower bid costs, reduced risk, and improved performance.
Commit to championing suppliers
Procurement has evolved over the last 25 years with the introduction of sophisticated procurement and tendering strategies, greater transparency and governance, strategic supplier management, and driving sustainability and social value through procurement.
Procurement leaders must continue to be the catalyst for change, promoting the profession’s extensive achievements, while championing the contribution and successes of suppliers. The work procurement and supply chain professionals undertake is often complex, business-critical and incredibly challenging, and more often than not, this is the same (or sometimes worse) for suppliers. This relationship is co-dependent, and faster, clearer, more transparent communications will help to efficiently harness those collective strengths for mutual benefit.
About the author
Ben Berry is a supply chain leader with over 20 years of experience optimising value and innovation in demanding environments across transportation, central and regional government, public and private healthcare, water infrastructure and automotive sectors. He is a leading expert in strategic supplier management including supply chain risk and intelligence, supplier management and market engagement. Ben has an established record of developing and delivering procurement strategies for complex major projects including development of requirements, procurement execution, drafting, interpreting, and applying commercial terms in contracts, and supplier management.
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