21 Apr How to incorporate Supplier Engagement into your existing Supplier Management Strategy
I’m a great believer in the power of Supplier Engagement to deliver substantial benefits in all kinds of different areas.
In my last post, I outlined some of the main reasons why you need to be thinking seriously about building Supplier Engagement into your business practices. Today, I’m moving on to the next of the 3 things your boss wants to know about Supplier Engagement: how to get started.
Part 2: How to Incorporate Supplier Engagement into your Existing Supplier Management Strategy
Tearing up the rulebook is complex and costly, so it’s lucky that successful Supplier Engagement can be achieved without any drastic change in your strategy. Supplier Engagement enhances your existing strategy rather than replacing it, usually building on some of the activities you already do today.
Whether the goal of your strategy is to get products on the shelf faster or increase supplier diversity; you need your Suppliers to participate in a number of interactions with your organisation. Supplier Engagement is about the quality of these interactions. The more efficient they are, the faster and more likely it is that you will achieve your objective.
In a previous blog, The Secrets to Supplier Engagement, we shared the three pillars – or tools – of successful Supplier Engagement: Communication, Support and Transparency.
To illustrate how you can apply these tools to your situation in order to build good Supplier Engagement and achieve savings in time, cost and other resource, let’s look at a real-life example.
Case Study: Artwork Reworks
For a Supplier to provide their artwork right-first-time and on-time they need to understand several things: When to provide the artwork, and the reason why this date has been chosen; What the requirements are for a ‘complete’ piece of artwork; and how they are progressing against your expectations.
When to provide the artwork, and the reason why this date has been chosen
Make sure that your Product Developers share deadlines at the beginning of a project.
Already doing it? Great! But a key bit for successful Supplier Engagement is making sure that the consequences of missing each milestone are communicated clearly. For example, the Supplier may lose valuable revenue when the product isn’t on a shelf, but there are also the other inevitable knock-on impacts to you and the supplier; make these clear.
If you’re communicating deadlines and motivating Suppliers to meet them – you’re growing Supplier Engagement.
What the requirements are for a ‘complete’ piece of artwork
Accompany all interactions around the subject of artwork with links to artwork guidance.
This will help Suppliers work faster and to a higher standard, giving them everything they need to get the job done in an easy-to-digest format. What is the definition of ‘complete’ and what supporting information (if any) is required, and approved by who? What is the definition of ‘complete’ and what supporting information (if any) is required, and approved by whom?
People naturally want to do a good job – empowering them to do so makes doing business with you easier and increases the likelihood that your Suppliers will choose to bring their ideas and innovations to you. By contrast, we can all secretly admit how it’s always easy to find reasons to put that ‘difficult thing’ off till the next day…
How they are progressing against your expectations
Schedule automatic updates to your Suppliers when they approach deadlines or achieve certain milestones. Online performance dashboards are a great way to back up these communications, visualizing your Product Development process and your Suppliers’ progress along it.
Not only does this make sure that their expectations are always up-to-date but it recognises their effort and achievements. This is another key way of making your Suppliers’ experience of working with you more rewarding.
Our artwork rework example is just one small piece of the puzzle. It is just one KPI for one objective within your Supplier Management strategy. But what I hope I have demonstrated by sharing it with you is that the key elements of Supplier Engagement (Communication, Support and Transparency) can be applied to any Supplier Management initiative. All human interactions can be significantly improved by growing an audience’s understanding and motivation.
Successful Supplier Engagement does require some investment – both in terms of energy and money. However, I’m confident that the Return on Investment (ROI) for Supplier Engagement is significant. We often see annual savings of over six figures simply through the resource saving of empowered and informed suppliers using supplierENGAGE™ supplier self-help and automatic progress updates.
In my next post, I’ll share some examples of how you can calculate the ROI for your Supplier Engagement activities.