How can the Chief Procurement Officer Influence Supplier Relationship Management?
- Supplier Management
As we discussed in the first blog of this series, Supplier Management Relationships: Shifting from Adversaries to Partners, often procurement professionals neglect to engage suppliers as strategic partners, and this oversight is one we need to work on as an industry to improve.
As a CPO how can you make that shift to strategic supplier relationship management?
The 2016 Innovators Forum Report commissioned by the National Association of Educational Procurement, highlights how CPOs can focus on “activities such as spend analytics, advancing eProcurement processes, opening two-way communication around strategic goals, driving innovation, extracting value beyond price and building strong supplier relationships that can evolve into true partnerships. “
One of the first steps to take as a CPO, is establishing a clear vision for the future and a framework of how to obtain greater value from supplier relationships. As the report states: CPOs should start by considering what matters most to the executive team as it relates to supplier performance and value. The following were identified by the NAEP as the top items executives will likely care about:
- Obtaining a higher level of value creation
- The delivery of process excellence
- The delivery of innovative ideas in cost management to the university community
- Risk mitigation
- Advancing customer service to a leading practice level
Based on these concerns and key items, it is essential for CPOs to first ensure the partnership they are establishing with suppliers will provide value that aligns with the goals of the organization and key stakeholders. CPOs also need to work with their supplier base to ensure they have a strong understanding of what a strategic partnership means for each party, with a focus on the high-level goals established to support the organization’s strategic vision. CPOs need to make sure they have the support and dedication of procurement team resources that can be focused on establishing and building the strategic relationship to ensure the greatest returns are realized. And finally, CPOs must educate members of the executive team and other members of the procurement team on the value of strategic supplier relationship management.
Once you have buy-in and support to establish strategic supplier relationship management, the following are the relationship goals CPOs should focus on as identified by the Innovators Forum Report:
- Contract compliance goals and measurement
- Service satisfaction goals and measurement
- Supplier’s account goals
- A jointly established account vision
- A constant flow of ideas to support the vision
- A joint definition of value
- A confirmation of value delivered
- A roadmap for delivering value
- A path for the next 3 to 5 years
Recognizing and acknowledging the executive teams concerns, identifying the goals of the organization and aligning a long-term plan to support these goals, plus an open communication with suppliers are some of the key issues CPOs need to identify in order to start down the path to success with strategic supplier relationship management.