In the 1990’s De La Soul told us that three is the magic number. While they were singing about the three members of their band, it turns out there is a powerful principle of three that is commonly found in literature, religion, and any time someone asks you to come up with a list on the spot (you can always think of three things).
“Friends, Romans, Countrymen” – William Shakespeare in Julius Caesar
“Faith, Hope and Charity” – Paul‘s first Epistle to the Corinthians
“There are three kinds of lies: lies, damned lies, and statistics” – Benjamin Disraeli
When designing a supplier programme I also think of three building blocks – the first is how to on-board a supplier, the second is how to manage, and the third is how to develop. Each of these areas need different skill-sets, tools, and people (another list of three), each has a different value proposition.
1) On-boarding can encompass the processes of identifying new suppliers, inviting them to bid for work, validating credentials, contracting and setting up on company systems. This has typically been the domain of procurement. The variety of tools in this space is bewildering from spend analysis, to eSourcing, to contract authoring, supplier portals, data validation, desktop auditing software, eCatalogues, EDI, eInvoicing, the list goes on and on. The value proposition is to obtain the right goods and services at the right price point. It speaks to efficiency as well as the efficacy of purchasing.
2) Managing is more focused on performance, compliance and relationship. Supplier relationship managers are a rising breed of professionals who are adept at dealing with supplier account managers, juggling the demands of stakeholders and building a ‘preferred customer’ status with the supplier while maintaining relationship discipline. There are fewer ‘tool’ providers in this space and many are very light weight which just act as repositories to store information, collect surveys, track benefits. The value proposition of good supplier management is to extract and exceed the value promised in the original contract, to mitigate risks and to ensure continuity of supply.
3) Developing, on the other hand, is knowing where to step in when key suppliers are struggling but is also knowing where to apply organisational resource to create innovation that offers competitive advantage. Ownership of this aspect is less clearly defined, stakeholders will include operational leads, research and development, supplier relationship managers, supply chain leaders and even procurement. Tools are sparse and typically disconnected to other parts of the supplier management process. The value proposition is different as impacts the top line. It creates new opportunity that will allow the organisation to compete in the market.
So how can your organisation achieve all three? Answers to follow in future posts… (there will be three of course).
Grant Watling is a Principal Consultant and Global Consulting service line leader at HICX Solutions. HICX Global Consulting has the mission to help clients make the most of their SRM investments in the shortest possible time and specialise in providing advice on all aspects of supplier management.