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How to Start Building the Optimal Supplier Experience

How to start building the optimal supplier experience

Building the Optimal Supplier Experience

Providing an optimal supplier experience is only possible through a deep understanding of how your suppliers are expected to interact with an organization and then streamlining those processes in a ‘supplier-centric’ way. From a practical perspective, ‘supplier centricity’ in the context of Supplier Experience Management means removing friction from every aspect of the relationship for all suppliers across the board.

As Anthony Payne, CMO, HICX, explains, by reducing or removing this friction, “You’ll have greater control and visibility through massively improved data, and you’ll position yourself to be customer-of-choice for the largest possible number of your suppliers.” 

Conversely, difficulties in providing suppliers with the information they need, heavy demands for information from suppliers and unclear routes of communication means the supplier experience will feel fragmented and confusing with lots of friction.

In this article, we explore how to remove friction through three techniques:

  • Using segmentation to drive better supplier experiences
  • Putting yourself in your suppliers’ shoes
  • Evaluating the supplier experience through measurement or feedback

Why focus on finding and removing friction?

Examples of friction are clearly shown in the results of HICX’ recent Voice of the Supplier Survey.

When we asked suppliers ‘What would be the one thing that would most improve the relationship between yourselves and your most important customers?’ providing more relevant information and feedback to suppliers comes in highest at 25%, more efficient resolution of enquiries was cited in 14% of cases, and better two-way communications at 10%.

Rounding out the top five are more joint collaboration or innovation (14%) and reasonable expectations, at 8% of respondents.

optimal supplier experience - How to Start Building the Optimal Supplier Experience
What would be the one thing that would most improve the relationship between yourselves and your most important customers?

The survey shows that there are a wide range of concerns for suppliers. However, many of the top concerns are specifically related to the communications aspects of the supplier experience. There are therefore clear steps that can be taken to improve the situation. 

How to use segmentation to drive the supplier experience?

When thinking about supplier segmentation in the case of supplier experience, it is a little different from the traditional Kraljic matrix that is used in Procurement, although this may be used as part of a segmentation definition. In this instance, segmentation refers to using many defined groups of suppliers to drive dynamic customization for those groups.

Dynamic customization, or tailoring, means taking the data that a supplier provides and using that information to adapt the experience based on that input. The information that is used for adapting the experience can also be used to filter different suppliers into groups or micro-groups.

“This could be as simple as dynamically customizing your onboarding form to only ask the relevant questions for each supplier or providing invoice payment status visibility or even just adding a phone number for supplier enquiries to your correspondence,” Anthony Payne advises.

While the Kraljic matrix enables us to make internal decisions about which strategies to use, its function is mainly to inform resource allocation. The second reason we segment, Anthony explains, “is for what one might call ‘experiential’ reasons. In other words, how do we adjust the experience that the supplier receives based on their characteristics? This is a much newer phenomenon but it’s one we know that some of the most forward-thinking organizations are addressing.”

optimal supplier experience - How to Start Building the Optimal Supplier Experience
Flow chart to show application of segmentation

This area offers a lot of opportunities. As consumers, we are all used to a world of increasingly personalized content and experiences, whether this is via recommendation engines or highly targeted adverts based on browsing history, among many other techniques. It is founded on the vast amount of information that brands can access about us. The same principle holds true for suppliers.

Now technology is enabling suppliers to access an enterprise portal in their chosen language, to see their preferred currency, to see the compliance and risk information relevant only to them, or to access important transactional information at the click of a button. This is in spite of an organization perhaps having 18 different ERPs, two P2P suites and a dozen other best-of-breed applications which might need to be accessed in order to serve the supplier.

As Anthony concludes, “If you combine this with intelligent self-service so that the supplier can express their own preferences – just like I can choose the language on the website of a multinational brand – you can deliver what feels to the supplier like a one-to-one experience, just for them, and that removes friction.”

Putting yourself in suppliers’ shoes – How, when and where to apply dynamic customization?

Practitioners in leading organizations are understanding the importance of ‘putting yourself in the shoes of the supplier’. They are evaluating what it is like to engage with the organization based on various different personas and scenarios, asking targeted questions such as:

  • What if I were a core strategic supplier versus a tail-spend supplier? How does that impact the experience when interacting with the organization?
  • What is it like accessing information in different languages?
  • How easy is it for me to change bank account information or find out payment status?

Relating it to the customer-facing comparison, Anthony explains, “We all think we know what it’s like on the other side of the table, but almost all of us will be surprised, or even a little shocked, to find out what it’s actually like to use these systems in practice.”

How to remove friction through measurement and feedback?

Carmen Erhardt, Director of Corporate Purchasing and Head of Global Processes, Operations and Digitalization at Henkel, agrees and points out that there are different roles to consider on the supplier side and there are different portals in use that are all required to service the end-to-end relationship with a supplier for its entire lifecycle. She adds, “What I think is interesting, in this context, is to start measuring what you’re demanding from suppliers. 

For example, one metric would be to count the clicks – how many clicks does a supplier need to make to do business with you?”

On top of undertaking an evaluation of your suppliers yourself, another good place to start is to ask suppliers directly for feedback. While we may not like what we hear, it is important if we truly want to know how to measure the experience, set benchmarks and improve.

Also, measuring how the supplier would rate the performance of the customer organization is a hugely valuable component, in a reversal of the usual supplier performance management concept. 

As Anthony Payne explains, “By holding themselves more accountable for the things that matter to suppliers, companies can identify those areas which will have a meaningful impact on the supplier and, in turn, start to drive some of the benefits, like access to supply during times of constraint, favorable pricing because the cost to serve is lowered, or greater and more willing participation in corporate initiatives.”

Carmen Erhardt says that she would start by measuring the platforms and channels that are used to approach suppliers, in particular how they perform in conjunction with questions such as how long certain processes take, for example onboarding. “You can then set targets to drive down these averages,” she adds.

She talks about taking stock of how many questions the supplier is being asked to respond to and trying to reduce this by removing duplicates. She explains, “If you really go through it, end-to-end, from the suppliers’ perspective, you will think ‘You asked me this already, why are you asking this again?’”

It is a useful exercise as it reveals inconsistencies in processes which, once removed, creates efficiencies for both sides.

What are the first steps towards a best-in-class supplier experience?

In summary, organizations should think about their approach to the following tasks:

  • Evaluate how to use segmentation to dynamically customize experiences, such as onboarding or other workflows and start with basic improvements from which to build
  • Discover points of friction by testing processes and workflows in the context of different types of suppliers, and fix them
  • Set goals related to supplier satisfaction and start measuring these as part of ongoing supplier experience improvement
optimal supplier experience - How to Start Building the Optimal Supplier Experience

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