How does Supplier Experience Management create a win-win for both customers and suppliers?
The last years have seen a fundamental and permanent shift in supply chain relationships and leading organizations recognize that their future growth relies on the strength of their supplier base. Supplier Experience Management (SXM) is the practice of creating the conditions in which a buying organization and all of its suppliers can achieve mutual success together.
As such, SXM aims to identify and remove friction points for all suppliers. Through this pragmatic approach, more suppliers’ time and resources can be freed up for them to focus on doing their best work for a customer.
This article will focus on three areas that create win-win situations for both customers and suppliers:
- Higher levels of efficiency
- Closer industry partnerships and collaboration
- Access to innovation
Higher levels of efficiency
Too often, large organizations create far too much friction in the relationships with almost all their suppliers. While unintentional, this creates pain and cost for those suppliers, which in turn has a knock-on effect on the manufacturer themselves.
It can relate to the number of different systems that suppliers have to log in to, or the number of data requests, which are often duplicated and that usually have little in the way of instruction – which leaves the supplier to figure out whether the latest request applies to them.
Supplier Experience Management means identifying and removing these friction points. This frees up suppliers’ time to focus on more value-added activities. It reduces suppliers’ costs to serve you, which in turn supports more favorable pricing, and it puts you in pole position to be the customer-of choice for every supplier.
As Ramit Mahajan, Head of Supply Chain Enablement, India at Henkel, explains, “We make sure that the suppliers that we would like to work with, equally like to work with us. It just cannot be a one-way street.”
Closer industry partnerships and collaboration
Organizations should remember that suppliers also have their own aims and objectives and that the ‘magic’ happens when these goals and objectives are aligned.
According to Robert Bonnar, Senior Global Procurement Director of BP, “Sometimes the ROI, or the mutual win is less obvious at first. Let’s say in gas or energy, or whichever industry it might be, if you can improve the regulations, then actually it drives improved quality and value for everyone. Even for your competitors, at some point, when they catch up.”
“If through the conversations with suppliers, we can actually find a way to build opportunities to approach the regulators together, this builds a good sense of partnership because it’s impossible (or relatively impossible) for you alone, as the customer, to go and change the regulations without the heavy involvement of the suppliers as to what differences and what changes would really make sense to improve areas such as safety, quality, cost or value,” he adds.
First access to ideas or new innovations
Removing friction points and focusing on partnership also frees up suppliers’ time to focus on more value-added activities, such as product innovation.
For example, Mary Beth Lang, Chief Supply Chain and Procurement Officer at Kaiser Permanente, explains how, as a result of their long-standing commitment to impact spending and supporting diverse suppliers, those suppliers provided reciprocal support during the hardest periods of COVID-19 pandemic. Not only that, but they were also actively looking for ways to help them when the crisis hit.
“Their willingness to retool was also very helpful. We had a big oxygen shortage in December, and we had three different companies that were very innovative, so we were able to set up different pods outside our facilities and were able to give to our patients the oxygen concentrators as they left our facility. Those are the suppliers that we look to when we have a crisis,” she says.
To find out on this topic, have a listen to our webinar on How to Improve Transparency & Reduce Supply Chain Risks When Working with Suppliers in collaboration with Procurement Leaders.
This article is based on Chapter 6, ‘Why is the SXM approach a win-win for both suppliers and organizations? What is the (soft) ROI for organizations?’ of our Preparing for Supplier Experience Management whitepaper.