Parenting is hard. Parenting well is harder. My very wise sister-in-law likes to remind me: We’re not raising good kids; we’re raising good adults. Why am I mentioning this in a post about procurement? Because parenting has major and valuable lessons for procurement professionals, especially when working with a “young” or more immature supplier relationship. The goal is not to have a superior/subordinate or parent/child relationship between buyer and supplier, the goal is a partnership where both businesses see sustainable value when the relationship reaches maturity. Even in well-established supplier relationships, a procurement transformation, major market disruption, or business transformation can have a resetting effect and cause us to start the core interaction all over again. Today let’s talk about building supplier relationships through the lens of parenting: overcommunicating with suppliers, being clear, standing your ground, and keeping consistent internal communication.
Overcommunicate
One of the best pieces of wisdom I’ve received in my professional life: “If you feel like you’re overcommunicating, you’re probably just communicating enough.” It’s so true, and I’ve seen it play out over and over. Of course that means listening, not just talking. When working with a new supplier relationship, it helps to remember that supplier doesn’t “just know” what you haven’t told them. Especially if the buyer doesn’t have a supplier manual, supplier expectations might not be as clear as the buyer thinks they are. Even though the buyer might feel like they’re saying the same thing over and over, the supplier is new here and it might be the first time they’ve heard it. It gets super tiring to repeat ourselves, but it’s so necessary. (Can I just record myself talking about our new travel/gift policy and hit “play” every time I’m on a quarterly supplier call?!).
The need to overcommunicate happens again if either the buyer OR supplier is going through a major business transformation, procurement transformation or shift to a new ERP system. Just because you have been working with a supplier for 20 years doesn’t mean a major shift didn’t change something. Even a change in sales representative or category manager might cause information to be lost about “how we do business,” and need some extra overcommunicating.
The last and most important piece of communicating is communicating your WHY. (As always, I have to link to Simon Sinek’s foundational TED talk, start with why.) This is true everywhere, but really applies with supplier communications. Communicate as much of why you’re doing things certain ways with suppliers as you can without violating confidentiality. Your “why” for e-auctions is to get your costs to market rates, yes, but it’s also to clarify your scopes of work/supplier requirements and speed up your procurement negotiation process. Your “why” for needing product delivered before 3 pm is because the elementary school down the road gets out every day at 3:30 pm and the road is the bottleneck for the entire street. While this is a very niche and slightly odd example, it’s the kind of thing that actually happens with businesses every day. Perhaps your “why” for implementing a new process is that you have a new procurement leader who came from another company and is here to improve things. Communicating the “why” to suppliers helps them meet your business needs. Suppliers frequently know their business category better than the category manager, so knowing the “why” enables creative solutions to problems.
Be Clear
Similar to overcommunicating, clarity with suppliers (especially new supplier relationships) is very important. They don’t “just know” what your business needs, they may not have even worked with your business at this point. The hardest part of being clear is not communicating what you need… it’s knowing what you need. It’s easy to underestimate how hard it is to truly understand your requirements and is often where software implementations fail. Do you know what part of the supply chain iron triangle (cost, quality, speed) is most important to you? Is your whole procurement team aligned around that priority? Is that priority different depending on the part of the business making a purchase or the category being purchased? Answer these questions internally first, and then communicate them clearly to suppliers (especially new ones).
My favorite Steven Covey habit (from 7 Habits of Highly Effective People) is “Begin with the end in mind.” Why does this apply to setting up new supplier relationships and being clear? Because in any new relationship, you cannot expect consistent behavior if you’re constantly changing expectations. This looks like, “While you were a new supplier, this quality standard was acceptable. Now it’s not and we are disqualifying you from this bid.” It is ok to have a roadmap for suppliers (such as “you need to have this cybersecurity certification by this future date), but don’t shift sands out from under them with no warning. Changing expectations adds uncertainty to the relationship. Uncertainty is a risk. Increasing risk increases costs. The absolute best way to reduce costs in procurement is always to reduce uncertainty and risk for both the buyer and supplier. This is a win-win situation and is why a clear scope of work is so incredibly important.
Stand your ground
Related to “beginning as you mean to go on” and “communicating clearly,” any new relationship means choosing your battles. Choosing your battles is most important when you’re changing roles or companies, if you’re onboarding a supplier and still solidifying that relationship, or if you’re parenting a strong-willed child. Not choosing to win a battle and holding to convictions is the number one error I see my clients making with e-auction programs. Suppliers will test if a company is serious about using an e-auction program as a negotiation tool and will seek to reduce company leverage where they can (which indicates why e-auctions are so powerful). Do not back down if you are implementing an e-auction program or if you have decided to negotiate a supplier proposal, because backing down loses leverage forever. I don’t mean to be extra “doom and gloom” about this, but I’ve seen it multiple times. If you choose a battle with a supplier over cost, quality, delivery, customer service, or anything else, stand your ground.
It’s human nature to want a specific answer to a request. It’s also natural for us to keep asking until we’ve been told “no” firmly enough that we have to back down. With suppliers, sometimes this means they ask their category manager for an exception to policy (longer payment terms, different requirements for on time delivery percentage, an e-auction requirement, etc.), and may try to work their way up the procurement hierarchy to see if they can get the exception. This is definitely true if there is nepotism involved between that supplier and the company, and it’s important the procurement team continue to stand their ground. Especially in the case of nepotism, the procurement team must have executive support to be able to maintain leverage with a supplier.
Consistent Internal Communication
Keeping consistent internal communication speaks to the “Mom said no; go ask Dad” approach. This shows up most frequently when a supplier goes directly to a technical team to try to secure business without going through the company policy or procurement process. At some companies, the technical team sends potential suppliers or even incumbent suppliers back to the procurement team to follow the standard process. However, I’ve worked with many companies where the technical team will work with one supplier to specify, design, and build a solution and then bring that solution (with quote) to the procurement team to purchase. Sound familiar?
The way to combat technical teams sourcing directly from one supplier without competition is not with stronger policies, even if that seems like the “easy button.” The best way is to keep a great internal relationship between the procurement and technical teams. Ensure the technical team understands why the procurement team needs to be involved, and make sure the procurement team is helping instead of making things more difficult. Make the path of communicating with procurement about upcoming projects easier than coming to procurement with a pre-formed quote. Procurement is always about relationships, make sure you’re building them. Be present and helpful at technical team meetings. Streamline the procurement process to make it easy and focused on true value. Make sure your company is a customer of choice for suppliers so your suppliers are willing to follow your process.
New or renewed supplier relationships are full of possibility, but also fraught with peril. It takes real skill to build sustainable relationships with suppliers in a way that builds value for both businesses. With overcommunication, clarity, standing your ground, and internal consistency, procurement teams can turn a new supplier relationship into an amazing supplier/buyer partnership. If you would like to talk about your new/renewed supplier relationships, let’s chat. If you’d like to get these articles weekly straight to your inbox and never miss one, sign up for my newsletter.
My book, Transform Procurement: The Value of E-auctions is now available in ebook, paperback and even hardcover format: https://www.amazon.com/dp/B0F79T6F25
