Supplier Experience Working Group launched as supplier centricity takes center stage
HICX has launched a Supplier Experience Community Working Group with an inaugural virtual event. This first event saw the coming together of around twenty leading Procurement and Digitalization practitioners, from some of the world’s largest enterprises, to discuss supplier experience and supplier experience management (SXM).
The Supplier Experience Community Working Group
The Group, which meets under Chatham House rules, provides a forum for peer group best practice and problem sharing. Its objectives are: to drive a ‘Supplier Experience mindset’ in organizations, to identify the value drivers of improving supplier experience and to define the requirements needed for developing a tailored supplier experience. It is hoped that, in conjunction with others who are seeking to improve supplier experience, the community will form the foundation of a wider movement, which will ultimately benefit the supplier.
As part of the first event, the Group was joined by Dr Elouise Epstein, one of the world’s preeminent experts and futurologist on digital procurement and how it affects supply chains. Topics for the discussion were inspired by expert insight provided by Dr Epstein throughout the session and covered areas including the implications of best-of-breed ProcureTech transformation on SXM, the type of experience that should be targeted for suppliers, and the role of technology in enabling these experiences.
Dr Epstein opened the conversation by stating that the supply chain needs to be more transparent, more secure, digital, sustainable and more flexible than ever before – and raised the point that it consists predominantly of third party relationships. This is a key aspect that Dr Epstein believes is frequently missed, and therefore means that supplier management – and the question of how we engage with suppliers – are core areas that must be addressed, especially as this also represents the greatest source of risk to organizations.
Where we are today
As such, Dr Epstein reiterates the mantra that 2022 is the “year of the supplier,” as we continue the move away from supplier relationships based on total cost only to those based on total value, where regulations are demanding more scrutiny than ever, and where the notion of being customer of choice is raised as a strategic objective.
However, as Dr Epstein reminds us, the path to this point has been far from smooth, meaning that interactions with suppliers are typically still fraught with frustration, with suppliers having to navigate a landscape of many systems, with there being little design or compelling content for suppliers and communications that remain predominantly one-directional. On top of this, the demands placed on suppliers to respond to risk assessments, carry out ESG self-attestation activities, and provide lists of capabilities or participate in innovation hubs are also growing.
How do we build SXM
Dr Epstein defines SXM as, “Providing a delightful, easy-to-use way for suppliers to interact with a company’s procurement systems.” The components of this include:
- Information management
- Connectivity to other systems (contracting, invoicing, quality, collaboration)
- Communications
- Relationship building
- Extensibility (outside the four walls)
- Bidding
- Support
- Reducing the administrative overhead for all parties
Dr Epstein uses the analogy of LinkedIn to describe how these aspects relate to supplier experience, such as a single location to manage information being akin to a LinkedIn profile. She urges organizations to log into their own systems, but to do so from the perspective of the supplier using the system. This exercise will clearly illustrate how far removed today’s supplier experience is, when compared to updating details on a LinkedIn profile page.
In order to assess how to provide the right experience to suppliers, Dr Epstein reminds us that one of the first activities is to consider how to segment suppliers (in terms of their relationship to the enterprise). The segments provide supplier groupings, or ‘archetypes,’ which will be different for every organization and industry but may include distinctions such as value-add suppliers, ‘drivers of growth’ suppliers, essential suppliers, and transactional suppliers, for example.
This principle of using archetypes further helps to define the types and configurations of systems required to support them, as well as stipulating system access and user management requirements. The segmentation needs to be carried through into the systems’ designs, as communications and relationship building are directly tied to the systems being deployed.
Dr Epstein stresses the importance of journey maps, which are infrequently produced, but highly valuable. The journey map should consider all the types of user and illustrate where and how they would be interacting with systems.
SXM good practices will seek to eliminate sources of confusion for suppliers, making information relevant, up-to-date and easy to access from a central point using Supplier Experience Management software. The Group had the opportunity to evaluate various approaches to this currently being used by a number of brands.
It is also important to review the extent to which two-way communications is being promoted and supported. Importantly, information should be visually appealing and incorporate the right messaging, which means collaboration with marketing is advised in order to ensure that suppliers are equally able to work on behalf of your brand. Marketing techniques should additionally be used to segment suppliers into audiences and measure levels of engagement, such as click throughs on emails sent, for example.
This led to discussions in the Group on the importance of segmentation specifically between different types of direct and indirect suppliers, and other categories. For example, there are significant variations in the supplier user journey for direct suppliers versus those in other categories, such as marketing agencies or IT providers, that need to be taken into account when considering how to build the supplier experience. There are also groups of suppliers that have very specific user journey needs, for instance those in agriculture, especially when considered from a regional or local perspective, which further illustrates the shortcomings of any ‘one-size-fits-all’ approach to supplier portals.
Similar to the way in which personas are used in marketing, therefore, as an important part of segmentation, supplier experience should be seen through the lens of different ‘supplier archetypes’ and suppliers should be involved when forming the definitions of these archetypes. The experience, meanwhile, needs to take inspiration from the smartphone world, which has ushered in an era of consumer grade interaction with applications, whereby the use of ‘training’ on how to interact with an application is considered absurd.
Where are we going
Increasingly, the ProcureTech landscape is going to be characterised by numerous plug-ins into the supplier system resulting in “an ecosystem of connected microservices offering value-creating point solutions.”
The journey to building this landscape entails drawing up a considered road map to determine priorities in terms of capabilities, which will take into account functional area requirements such as procurement enablement, supplier management, sourcing, category management, contracting, requisition, payment, planning, data and analytics, risk management, ESG, and quality management, as well as considering potential M&A activities.
The data foundation in this environment, meanwhile, is a vital component for integrating these applications into a single, unified user experience from the supplier’s perspective. It should provide that “LinkedIn”-style backbone, using the previous analogy. It is also why information management, gaining control of the data and managing the lifecycle of that data, is the use case to start with as the pillar for the rest of the roadmap.
A call to action
Dr Epstein believes that most companies are struggling with the transition to becoming supplier-centric, as, in reference to the tasks outlined above, she warns, “If we are not doing these activities, we are not going to build that end-to-end supply chain.”
She does think that there are organizations that are doing certain elements of this well, but equally there are technology constraints, as many of the enabling technologies are only now being developed.
However, the Group agreed that, for many, there is an ever-growing commitment to building out an ecosystem to tackle supplier-centric procurement transformation on the one side, as well as extending the supplier record into the enterprise on the other.
