How the Suppliers’ Perspective Will Reshape Ways of Working
Table of Contents
Collaborative mindsets and capabilities
Following the recent publication of the HICX’s Voice of the Supplier Survey, in which we asked over 500 suppliers to some of the largest companies in the world about their challenges and recommendations that they have for reducing friction in relationships between enterprises and suppliers, we asked a panel of experts to provide their reactions to the findings of the report.
In this webinar, hosted by Procurement Leaders, Anthony Payne from HICX was joined by Manikandan PY, Procurement Digital Leader, Global Supply Chain at Schneider Electric and Rich Sains, Founder at Acada and a former procurement leader at a number of FTSE 100 organizations.
In the session, the panelists were asked about whether enough was being done to set suppliers up for success; why, in the suppliers’ view, so much burden was still being placed on them and what more could be done; and what the future of the relationship between enterprises and suppliers looks like.
The Voice of the Supplier Survey
As Anthony explains, already two years ago, HICX ran a comprehensive survey asking large enterprises about their views on the extent to which they were prioritizing supplier experience and where they believed the opportunities for improvements exist.
He continues, “It also occurred to us that, if we’re talking about supplier experience and the focus on the supplier, then it rather begs the question, what do they think? They’re not passive in this debate, they’re half the relationship. It seemed to be a very big gap in the market generally – a lack of understanding at supplier level about what it is like to supply to some of the world’s largest organizations. Where do suppliers themselves see the challenges, and where do they think the opportunities for improvement are?”
“I think it’s fair to say that a lot of organizations could answer those questions, or have a good sense of those for their very top-tier, very small number of strategic suppliers, but without going all the way down into the long-tail, there’s this big mass in the middle of suppliers who are hugely important – and their opinion and their experience is not totally well understood or not very well understood at all,” he says.
Challenges in setting suppliers up for success
Commenting on the report, Niko raises the point that 61% of suppliers surveyed said that they find it challenging to do their best work for their most important customers and notes how many of the pain points highlighted stem from just the sheer number of systems that suppliers have to interact with.
Mani replies, “I am not at all surprised really about the survey result. If I look at the report more deeply, it also says that on average a supplier has to log into 8.4 systems per customer. For one customer. I did a survey five years back when we set up this project around digital supplier interaction and I had similar statistics from our suppliers. The pain point was around communication, visibility and growth. The main reason for most organizations, in general, was that we were digitizing processes in silos and adapting to the technology maturity available at that time. So not thinking about the ‘end-to-end’ internal user journey or the supplier journey.”
Rich reflects, “It’s quite a statistic isn’t it, that’s a lot of wasted value for organizations. Procurement tries so hard to get the best deal upfront and then 61% of suppliers are saying that they can’t do their best work for those organizations – so a lot of that effort is being wasted. So, I think, there’s not enough being done to reduce complexity in a lot of organizations.
In some cases, if digitization isn’t done right, it can actually make things worse. You take something like a supplier onboarding process, where you have a one-size fits all approach and the process design is a bit of a check box exercise, covering off some risk points that have been brought up over the last six to twelve months. I think that can be really difficult – the process design, the user experience, that type of thing – it doesn’t extend to the supplier and while you may think about how it is for your internal teams to use, and you might not even think about that, but for suppliers that process can be painful.”
Anthony concludes by pointing out the inherently complicated nature of working with suppliers. “If they’re logging into multiple systems, you’ve got to enter the same information, potentially multiple times.”
“And the other problem that I don’t think is touched upon very often is that they’ve got to figure out themselves which information is applicable to them.
Companies tend to broadcast – we’ll put it up on the website, or we’ll send an email. But each individual supplier knows that not everything that is produced by an organization, their customer, not all of it is relevant to them. They’ve then got to figure out, which subset is relevant to me – and to Rich’s point, that’s not value-added work.
So why does it persist? Because it’s really hard. Suppliers are complicated, there’s tons of different people working with them, lots of people impact the data, lots of different systems involved.”
How to reduce the burden on suppliers and remove friction
Niko reminds us of the burden suppliers face, citing the survey result “60% of suppliers say that they do spend too much time on admin when serving their most important customer,” and also highlighting the issue of communication: “47% of the respondents say they struggle to get their enquiries resolved.”
Niko puts the topic of communication to Mani, who replies, “The Procurement organization is evolving as we speak. We are moving beyond management of calls with our suppliers to topics like sustainability, cyber security and so on. Constantly we are evolving and this is driving new initiatives upstream with the suppliers, requesting lots of data and information from suppliers. So communication I see as a major pain point for suppliers.”
“This is why we set up a digital interaction platform that manages this two-way communication and also provides visibility on interaction around end-to-end business processes,” he adds.
“Today we are in the process of setting up a digital ecosystem which is a continuous journey to enhance our overall supplier experience. So, it’s a point to be addressed from a technology standpoint, from a people standpoint, and also from an organization standpoint.”
The importance of segmentation
In order to tackle the issue, Mani provides some insight into his approach and underlines the importance of segmentation. “So, when we digitize the experience with suppliers, we start with the process. We look at the current process end-to-end when we talk about a specific business process and, to define the future state, we look at the journey from the supplier persona perspective. So, how many different personas are going to interact with us on this particular process, from the supplier side as well as from the organization touch point.
And then also to segment the suppliers. You have strategic suppliers through to the tactical suppliers, and the transactional suppliers. It’s not the same information that you share with everyone. So how do you segment? And when you communicate, what is the different level of communication you’ll have? And even when you do a process around a contract or an NDA or performance management, how do you then segment it differently?”
Rich agrees, adding some thoughts from his experience. “In terms of what we can do, I think the communication part is vital. Any time you get called in and there’s an issue with a supplier relationship, it’s never a one-sided issue. Sometimes it can sound like it when you go in there, but often it’s just a breakdown of communication between the two sides.
Obviously, again, that’s somewhere, where lots of value can be lost through those relationship breakdowns and having to replace the supplier. And if you could catch those early and be proactive and improve that communication, then we can avoid that sort of issue.”
Picking up on Mani’s point on segmentation, Anthony continues, “Procurement has typically thought about segmentation in terms of dividing up suppliers into segments to figure out what strategies to deploy to get the most from that relationship. Entirely relevant, entirely appropriate. Not all suppliers are equal, no one is suggesting anything otherwise. But there is another way to look at segmentation, which is, how do you look at the characteristics of each supplier and then tailor an experience for them?” he asks.
Simplification is key
Mani points out, “For me, simplification is key for the end user. So, simplification and efficiency is key for the end users from both of the organizations. I think there is no choice. With the advancement in terms of the technology on one side, and the evolution of Procurement as a function and the challenges that we face on the other, we don’t have a choice.
We need to think about our suppliers, walk through their experience, put them at the core and digitize our processes. There’s no other choice in order to be successful than to be more simplified in our approach and to be more efficient in the future.”
In the webinar, Mani offers advice in three key areas, namely:
- Data quality
- Data governance
- Alignment of vision with key stakeholders
The future state of Procurement
In terms of the future, Rich comments, “I think we’ve really moved away from this approach of suppliers being some sort of commodity that you could extract as much as you can from, in some zero sum game. I think that, organizations are listening to their customers more, they want to build lasting relationships. I think that’s the way we’re moving towards working in Procurement.”
Concluding the session, Anthony explains, “There are thousands of processes, micro processes and transactions where there’s inefficiency as a consequence of not paying attention to what the supplier experiences – and that’s on their side and on your side.
I think long term, more important, is this idea of becoming customer-of-choice, and that’s a little bit of a hackneyed or cliched phrase, in as much as it’s been around for a while, but I don’t want it to become cliché. I want it to be front and center. I think it’s extremely important.”