5 ways to spark Supplier Engagement: making vendors into partners
Responding to a tender last week, the project manager thanked me very graciously for my responsiveness and engagement during the process.
I laughed, thanked her as well, and said, “Well, it’s my job to be responsive and engaging”. Which it is. While working with business development at a technology vendor, I’ve learned that responsiveness and engagement in any evaluation process are very important.
A prospective customer should feel the same level of engagement from our team — as a prospective supplier — during the entire relationship lifecycle; from first-touch in marketing, to sales, to contracting, to after-sales/delivery, and beyond.
The project manager too cracked a smile but had a less enthusiastic look on her face than my own. She continued by responding, “you’d be surprised how little some suppliers care to engage and respond.”
It hit me directly after we jumped off the call.
Some buyers and suppliers have relationships where one party, or both parties, genuinely believe that the other party doesn’t care about their business relationship. It’s a sad thought, no?
As a provider of SRM solutions, Kodiak Hub’s entire technology and platform is aimed at helping buyers and suppliers transform their relationship and the way they do business; ensuring that they mutually have a better means to collaborate, report, share data, insights, and more. Our entire business model is built on the hypothesis that buyers and suppliers do care. And, that there is value to be extracted from that relationship and mutual gain to be seen from enhanced supplier engagement.
Any business partnership takes two and sometimes more than two. But, as we all know, or have experienced it only takes one to make the partnership very engaging, or very frustrating.
Kodiak Hub is here to put a stop to failed buyer-supplier relationships, for good. Especially when there is so much good that smooth supplier relationships can offer.
Responsible Sourcing starts with a solid Supplier Engagement Model
Supplier Engagement is one of the pillars to sourcing in a more socially responsible, ethical, and environmentally friendly manner.
As seen in the model to the left from Proforest.net, responsible sourcing is driven by 3 main value drivers; 1. Supplier Engagement, 2. Legislation and 3. Certification.
Each value driver is a consequence of the one before.
“In practical terms, supplier engagement is a set of mechanisms or interventions that are implemented with suppliers in order to deliver a company’s responsible sourcing commitments” (Proforest.net 2017).
Supplier engagement, unlike certification or legislation, doesn’t have any standard, or predefined approach as engagement within a buyer-supplier relationship is often very unique to each individual partnership, industry, and category.
“There are several elements to a successful supplier engagement programme: traceability and supply chain mapping; risk assessment, review and prioritisation; planning and implementing interventions with suppliers; and building wider credibility through transparency and a grievance mechanism” (Proforest.net 2017).
The importance of having a supplier engagement strategy and model is clear. Now, here’s our list of 5 ways to spark, and improve upon supplier engagement.
5 ways to improve supplier engagement
Don’t beat each other down
As mentioned above, a buyer-supplier relationship begins long before the trading of goods/services for payment.
Make sure you’re putting your best foot forward during pre-sales, sales, but most importantly — negotiation. A supplier’s engagement can be greatly impacted by beating down each other in a negotiation.
The world is evolving, procurement is evolving, buyer-supplier relationships are evolving and so should the ways that we negotiate & contract. The way we see it; profits aren’t very profitable if they’re made at the expense of people or the planet.
We’re entering into a new age of negotiation and agreements; what’s in it for me is evolving into what’s in it for WE. This mindset will aid your team in creating more engaging supplier relationships, where the mutual gain is in focus.
Suppliers are friends, not food.
Vendors are partners, not just supplies/services.
“To secure suppliers’ attention in favorable and challenging economic conditions, your organization should establish collaborative and mutually productive partnerships with them” (cerasis 2015).”
Though procurement and sourcing have the pleasure of being the selective party in a buyer-supplier relationship, suppliers can be selective as well. They choose their customers, and it’s best you didn’t forget.
Sharing burden and success with a partnership approach is a great way to ensure supplier engagement.
Simple methods can be implemented to ensure a partnership approach such as shifting RFPs/RFQs to RFPartnerships or RFSolution and partnering with vendors who will develop with you over time, not just those that will offer the best price when bidding.
Remove barriers for Collaboration
Communication is the foundation of a fruitful collaboration.
Ensure that you and your suppliers have the means to streamline communication, share interfaces, align on common goals and drive performance in a mutually beneficial manner.
Supplier Relationship Management technology is a sub-category of ProcureTech that is providing solutions to procurement and sourcing professionals in the same manner that CRM solutions have made a lasting impact for sales and marketing professionals 10–15 years ago.
SRM software solutions can apply platform effects to engage suppliers in a streamlined manner, and remove the barriers for collaboration and engagement.
Daunting tasks such as onboarding & governance can be made simple for suppliers by providing them with an engaging & immersive user experience. Though this is still a tedious step in a buyer-supplier relationship and can often cause hurdles to receive supplier engagement, the application of technology makes things a whole lot easier for a supplier; inherently implying to them that you’re invested in the experience they have as your supplier during the entirety of the life cycle.
Embrace and Invite supplier-led innovation
65% of innovations are supplier & partner-led according to a study from ISM (ISM 2017).
Remember, your suppliers are experts in their field; that’s why you started working with them in the first place.
Inviting (and expecting) their expertise and innovation should be a mechanism built into your partnership agreements. This can be something as free form as capturing stakeholder feedback during performance reviews, or something as formal as a shared investment in R&D projects.
If it’s supplier engagement you’re looking for, start relationships by having big ears and generous pockets.
Align and follow-up on KPIs
KPIs systematically and implicitly express expectations and acceptance criteria to your suppliers. This in turn allows the supplier to take accountability for their own performance and activities as partnerships are entered with a transparent framework for ideal performance, from the start.
Supplier engagement is better safeguarded when there are mechanisms in place to remain objective in a buyer-supplier relationship.
He said she said they are never the right path to go down, and has no place in a well-oiled buyer-supplier relationship. Alignment & follow-up on mutually agreed upon KPIs removes subjectivity, enhance transparency, and will inherently improve both parties.
If you’re able to automate performance evaluation, do so. This will save both teams time, and make output performance reviews mutually visible and data-driven to enforce objectivity.
This publication is brought to you by author Sam Jenks, but also in part by Kodiak Hub — A Supplier Relationship Management SaaS functioning out of Stockholm, Sweden. Kodiak Community intends to challenge traditional business practices with innovative thinking and creation.