What Causes Friction for Suppliers?
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As Adam Brown, Managing Director, Procurement Strategy & Digital Transformation at Maersk, points out in a recent interview with HICX, “The sheer multitude of touchpoints for suppliers when transacting with many large enterprises can create confusion and inefficiencies.”
The issue resonates with suppliers. Our recent ‘Voice of the Supplier’ survey revealed that 61% of suppliers agreed that they find it challenging to do their best work for their most important customer and this is frequently as a result of the complex technology environment.
In this article, we explore two key experiential areas that suppliers in our survey said that they specifically care about:
- Experiences related directly to the use of technology and systems
- Experiences relating to aspects of performance management and how the working relationship is formed
Adam says that an in-depth, honest review of these aspects from the perspective of the supplier is key, adding: “It’s the small things that count and can really start to make the difference, right from that initial touchpoint of the external website that you have for suppliers. What does it actually say? Is it up-to- date? Is it meaningful? Does it tell you, fundamentally, where to go for help and what you need to do to solve your problems?”
Where do technology and systems create friction?
There are four main areas which can create friction for suppliers and that can lead to poor supplier experiences from a technology – systems or platforms – point of view:
- Overall account management within the various systems or platforms
- Ease of finding information
- Processes used when sending back required information or completing customer-initiated tasks
- Raising and resolving enquiries
How the technology landscape relates to the end-to-end management of the relationship, particularly after onboarding, is crucially important but is often overlooked.
Adam Brown provides an analogy as he explains, “Traditionally, procurement is really just taking care of the first three dates in the relationship – we’ve got a contract in place, we’ve been approved, we’ve uploaded all of our certificates to the right place – but, then, there is a whole marriage to come.
Have I got a purchase order? Has the purchase order come in? Where do I send the invoice? How do I get paid? Who do I phone to chase up? There is all this side of it to consider, before just the operational day-to-day of how your supplier delivers goods or services,” he explains.
1. Suppliers find managing the accounts difficult
Our survey revealed that suppliers must login to an average of 8.4 systems in order to serve their most important customers. Meanwhile, 38% of suppliers state that they have to login to 10 or more systems to serve their most important customer.
This creates difficulties for suppliers in managing individuals’ accounts associated with the various systems, while also creating multiple points of entry for data. It means it is hard for suppliers to take ownership of their data due to lack of visibility across systems. It leads to duplication of effort and inconsistencies.
2. Suppliers do not find it easy to discover information
As Dr Elouise Epstein, Partner at Kearney, Supply Chain and Procurement Author, explains, many organizations “lack a cohesive, integrated and up-to-date place for useful information,” and, as a result, suppliers find it difficult to locate the information that is relevant to them.
Good practices within Supplier Experience Management must therefore seek to eliminate sources of confusion for suppliers, ensuring that information is current, relevant and easy to access from a central point.
One solution is to use a supplier portal that offers Supplier Experience Management software, which should aim to become a content hub that can serve relevant content based on indicators such as supplier type, supplier location, user role, user intent and other available data.
3. Pressure on suppliers to complete tasks creates ‘initiative-fatigue’
The pressure on suppliers not only to provide the purchased goods or services, but also to send extensive information back to the customer, is growing substantially. It is frequently widening to include providing certificates or documents; or responding to surveys relating to areas such as sustainability, diversity, child labor, conflict minerals, circular economy, working conditions, modern slavery, cybersecurity and many more.
As Carmen Erhardt, Director of Corporate Purchasing and Head of Global Processes, Operations and Digitalization at Henkel, explains, “More data than ever is now needed to be provided by suppliers, with further use cases emerging every day.”
The burden is being felt by suppliers, as 60% of suppliers in our survey state that they spend too much time on administrative tasks for their most important customers. Without change, suppliers will continue to face a growing administrative workload.
These costs can be passed on to customers as a result of the greater resources needed to manage information. It means that buyers need to take care to ensure that only the relevant suppliers are included for each data task. As Dr Epstein points out, “Many large enterprises have more than 50,000 suppliers and some as many as 100,000 — raising some uncomfortable questions for buying organizations. First, if every supplier fills out every survey, what happens with all of the information? Does the data actually serve a strategic purpose, or is this a gigantic check-the-box exercise? Second, what does the company do with this type of data?”
The advice: make sure you ask the right suppliers for the right level of information for the right purposes.
4. Frustration in resolving enquiries
Supporting two-way communications when the conversation is initiated by the supplier is equally as important as collecting data from suppliers. Just as consumers often select a range of different channels to contact organizations, the same is true for suppliers. However, these channels are often managed in isolation and this can create communication difficulties. This was shown in the results of the Voice of the Supplier survey. Almost half (47%) of respondents said that they find it difficult to resolve queries with their most important customers.
Dealing with enquiries is, of course, difficult. Without a centralized approach, suppliers may choose a variety of different channels for enquiries such as messaging, telephone calls, email, and so on. However, these may all be handled in different ways and by different teams. The value of an integrated communication channel is frequently underestimated.
Taking an example, Jerry Grable, Director eBusiness at BAE Systems, recalls how the Accounts Payable team at BAE Systems previously had to deal with a large number of telephone enquiries every day from suppliers asking about invoice or payment status. By applying the principles of Supplier Experience Management, this is no longer the case today.
“Now that this has been centralized, suppliers have access to the information and they can maintain their own information. This self-service approach has led to more than a 65% reduction in the number of calls to A/P Shared Services. A five-year business case was met within six months and suppliers are able to obtain the information they need, twenty-four hours a day, all year round,” he says.
To identify opportunities for improving routes of communication, it is worth undertaking an audit of enquiries to determine answers to questions such as:
- What channels are suppliers most frequently using for specific types of enquiry?
- Why have they chosen to use that channel?
- Is it the most efficient channel for this enquiry?
- How are enquiries routed to the correct internal contact for resolution?
- How long does it take for enquiries to be resolved through various different channels?
- How long does it take to resolve different types of questions, in different regions, or for different types of supplier?
- What improvements could be made to make this more efficient for both the organization and the supplier?
It is a neglected area. In our other recent Supplier Experience Survey, which was answered by 100 senior procurement professionals from organizations with $1 billion turnover and which takes the enterprise view, 67% acknowledged that time to resolve enquiries was an area that they needed to improve. However, as this report also revealed, it made it to the list of top three priorities in only 1% of cases.
Performance Management and Working Relationship
Of course, supplier performance metrics are key to measuring crucial aspects of the supplier relationship, including delivery performance, quality, price, risk or levels of compliance.
This information is also useful for suppliers to further improve their business. While 30% of suppliers in the survey said that improving service and support was one of the top three factors that they think most enables a good working relationship and 30% said that having reasonable expectations was a factor, 27% also put sharing performance data within their top three.
However, there is a disconnect. While over a quarter would have performance data within their top three wish list, 74% said, “The review performance metrics used are more helpful to the customer than to us,” revealing lost opportunities.
This underlines the importance of being able to take into account the supplier perspective in order to establish a mutual platform for collaboration and to set suppliers up for success. The result also shows the predominantly one-way nature of the relationship. While suppliers have to ensure that they meet certain performance criteria, there is, in most cases, no reverse mechanism to measure how well the customer is supporting a supplier to ensure that objectives can be fairly met. This is frequently the biggest gap, or blind spot, within organizations who are otherwise professing commitment to supplier-centricity.
How does Supplier Experience Management help?
As suppliers face increased challenges from more data requests, more technology and increased competition, buyers need to find better ways to support the supplier experience.
By adopting good practices that come with Supplier Experience Management, such as using data to improve experiences, limiting data requests to only what is truly needed and facilitating automated workflows and self-service options, we can better support suppliers’ needs.
This, in turn, adds the visibility required that is fundamental to building trust, growing the working relationship and ultimately becoming customer-of-choice.