Tag Archives: supplier management

Improve Resilience By Treating Suppliers As Individuals, Says Top Risk Expert

We can’t just get our own house in order. We need to help our suppliers’ suppliers if we want a truly resilient supply chain. Procurious gets expert advice from riskmethods’ Bill DeMartino


How can companies of any size manage the huge number of risks in any supply chain?

Procurious Founder Tania Seary recently sat down with Bill DeMartino, Managing Director of North America at riskmethods, to find out about risk and the future of procurement.

Become resilient or lose credibility

The word of the moment is definitely resilience. But where do you start?

Bill says it’s a process. Not long ago, most organisations were hunting for better information to react faster as threats emerged.

“So this is what I would really categorise as being reactive,” Bill explains. “We want to get better at reacting to events (which is a fantastic place to start by the way) and what I would think of as the journey to resilience.”

The pandemic obviously changed many companies’ perceptions of their own resilience.

Yet he points to data that we’ve seen a 300% increase in disruptions of all kinds over the past three years.

“That means that for organisations who weren’t before acting the mandate is clear; this is the responsibility of supply chain leaders,” says Bill.

“If they are unable to deliver on this responsibility, they’re going to be losing credibility within the organisation.”

The good news is senior management is recognising the importance of proactive supply chain risk management, which will likely lead to more funding.

Treat suppliers better

So we’re all after resilience. But what does that actually look like?

It starts with a shift in the way companies treat and manage suppliers, Bill explains.

“I think we’re on the precipice of moving into what I would call the era of collaboration,” Bill says. 

“Traditionally, we’ve seen working with most of our suppliers in kind of a generic manner and we treat a few of them very specially. 

“But I think that collaboration needs to extend to a broader set of enterprises and so that continuum will continue to be a major transformation element.”

From reactive to transformative

Changing the way we see supplier relationships is a good step, but it’s only the start. 

Once an organisation can react quickly and be more resilient, it’s time to transform. That’s why the most mature and forward-looking organisations are overhauling their processes right now.

“Transformation is not just enough for me to figure out how to be reactive, but I really need to think more proactively on how I can change the elements and the way that I think about the category,” says Bill. 

These advanced organisations are asking how well they understand category risk exposure. And how they can incentivise people to act on the risks they uncover.  

“So it’s really more of a holistic approach to risk resilience,” says Bill.

Automation frees up resources

The other hot topic is automation. Bill says it’s incredible how much of our supply chain can be automated. 

“Supply chain folks are just automating everything that they can and it’s crazy,” says Bill.

“We’re trying to automate all the AP functions, we’re trying to automate all the contract functions, and now we’re actually moving up into the next level and trying to automate the analysis in the diagnosis of the data and the information and insights in those systems.”

“[W]ith this automation we’re able to free up the scarce resources and get our folks to focus on some of the proactive resilience and collaboration efforts they really need for the organisation to thrive,” says Bill.

Risk management in today’s environment

What does great risk management look like today? 

Bill narrows it down to three priorities:

1) Change jobs descriptions and incentives. You need to think about culture change. 

2) Put in place technology that can standardise processes, then measure them.

3) Manage your people well. Ensure that staff are actually following those processes in the way you expect.

“That’s the shift in the maturation that we’re seeing from our customers.  Before, they would just get the information.  Now they are working out how to best utilise that information and become proactive in their risk approach,” says Bill.

Minimise risk, no matter company size

You might be thinking, “That’s all well and good, but I work for an SME. How does that work for a smaller company like mine?”

And it’s true. You may not have the resources or capability at the moment with everything going on, says Bill.

“A lot of smaller organisations are so busy just keeping the business going, no one is taking the time to take a look back and actually think about what it’s going to be in three to five years out,” says Bill.

“They’re  just worrying about survival today.” 

Even if your organisation is small, you’ll likely notice a rising interest in risk management – whether it’s from your customers and executive team. 

“Customers are asking them, potentially assessing them and looking to measure them in terms of their risk preparedness so that’s definitely helping [put risk management on the agenda],” Bill says.

“We are also starting to see a really strong sense of awakening from [senior leaders] and with the idea of a supply network.

“[They’re] thinking it’s not just enough for me to take care of my house, but I need my suppliers to also do the same for theirs.”

What can you do?

So whether risk management is at the top of your agenda already, or it’s just starting to gain importance, Bill suggests three key areas to get your house in order.

1) Using technology to manage risk: “There is an enormous amount of information that’s out there and the largest challenge that organisations have is how to filter through that information and uncover specific and relevant insights.” 

2) Make risk information visible: Can people in your organisation easily find information about risk? 

“We’ve seen a lot of folks who create risk scorecards or risk audits, and that information gets locked away somewhere,” says Bill. 

Instead, he suggests putting that information on your employees’ phones and laptops so they can easily access it when they’re talking to suppliers.

3) Integrate: The final step is to embed all of that risk information and data into other company systems.

As a supply chain professional, Bill says you should ask, “How can I integrate the technology and make it something that really impacts the way that we work?”

Going forward

Now that risk management is firmly on the agenda, you can use it to get ahead in your career. 

Bill predicts the most valuable procurement professionals in the future will be able to manage risk in two ways.

The first is artificial intelligence. Companies will need people who can use AI to spot patterns in suppliers to predict future events. 

“For example, if a supplier shutters a plant and fires the CFO, I could predict a bankruptcy is coming and reorganise my supplier geography to avoid disruption,” says Bill. 

“We can utilise artificial intelligence techniques to start doing pattern recognition and help folks better predict – never with 100% accuracy – but better predict what may be coming down the pipe for them.”

The second is to make suggestions on the best way to react if a threat actually comes to fruition. 

“There’s a number of different approaches that we’ve seen utilised to respond to an event, so we can bring all that information together and present to the individual in a way that allows them to very quickly assess their options, make decisions, and run.”

Bill DeMartino, Managing Director of North America for riskmethods, can be heard in the webcast series The Future Of Supply Chain Now.

How can you limit supply chain disruption and proactively plan for market shifts? Check out this IBM report to find out.

Your Supplier Made The News … For The Wrong Reasons. What Does This Mean For You?

What should you do if your supplier ends up in the news? Here’s what effect it could have on you and how you should mitigate the damage.


Let’s face it, 2020 has been the year that changed everything. Anytime you even go near a media website, you’re hit in the face with the latest pandemic disasters. 

Yet the domination of the news with COVID crisis has meant that there’s little room for much else, which, strangely, may have been a blessing in disguise for some of our organisation’s PR departments – and our own supply chain obligations. From whispers that much of the world’s current PPE is currently the product of modern day slavery to suppliers who have been caught out using substandard (and even contaminated) ingredients in food, there’s mounting evidence that while we’ve all been distracted this year, supplier standards may have been slipping. And while that may not have spelled disaster for us just yet, what do we do when the news catches up with them? 

It’s not good for them, and it’s not good for you. Here’s why … and what you should do about it. 

If your supplier makes the news, will your customers blame you? 

If you think that your customers are savvy enough to distance you from the reputation of your suppliers, think again. Ever since the Nike sweatshop scandal rocked organisations worldwide, it’s been clear that if your suppliers take a fall, you will too – and it can be highly damaging, if not deadly, to your reputation going forward. Businesses are just as – if not more – responsible for their suppliers than ever before. 

Concerningly, recent research has also found that even when a supplier mishap has, in essence, nothing to do with your product quality, consumers will still start to believe that your product is inferior. This means that if you were to have something like a COVID outbreak in your factory and it was widely publicized, even if you were able to maintain production, your reputation would still be tainted in your consumer’s eyes. Unfortunately, the reputational damage occurs no matter what the issue is: even if, for example, your supplier was caught polluting or even embezzling, your reputation would be the one to take the hit. 

If this sounds terrifying, it’s because it is. Even worse, conditions are currently ripe for it to happen. With our supply chains becoming more and more global and complex, it’s becoming harder and harder to track the activities of our suppliers, let alone our second and third tier ones. And with the rise of social media, the world is becoming more and more savvy – and any issues are becoming more likely to be exposed. Take, for example, Change.org’s famous campaign against Hersheys, which exposed, through social media, the continued use of child labour in its cocoa production in Africa, and forced the company to quickly change track. 

The conclusion? If your supplier has something to hide and the media finds out first, you need to be prepared to weather the reputational and financial hit. 

If it’s just slightly bad news, does it matter so much? 

As talented and thorough procurement and supply chain professionals, most of us already have an oversight of the worst risks and issues within our supply chain – and thankfully, we’ve mitigated them. So if something small slips through the cracks, will it really matter? 

Unfortunately, yes. Firstly, humans have a predilection towards bad news. Decades of psychological research have shown that we’re all naturally drawn towards bad news, so much so that even if nine out of the ten news stories we read are positive, we’ll always remember – and act on – the negative one. What this means is that we, as supply chain professionals, need to be extra cautious about what mishaps might slip through the cracks. 

Secondly, consumers don’t rationalise the ‘degree’ of bad news. In what psychologists call the ‘spillover effect,’ consumers were found to equally condemn companies for supply chain failures, even if the news wasn’t, technically, that bad. On every occasion, bad news in the supply chain meant that consumers were less willing to buy from the organisation for an extended period of time. 

How do you mitigate the damage? 

By now, you’re probably frantically checking and rechecking all of your suppliers, terrified that something may have gone wrong. And while the response is justified, and we should always aim to have as much insight as possible into our suppliers, know this: you can mitigate the damage done if your suppliers do end up in the news for the wrong reasons. 

And the best way to do this is to simply try to help find a solution, and communicate this to all involved. 

In positive news, research into the spillover effect has found that while damage can be done quickly, it can be undone at just the same speed. Organisations that act quickly to rectify issues, for example, those who instantly clean up environmental spills or put an end to labour issues, can rescue their reputation, if they take responsibility and put mechanisms in place to do better. And while consumer’s buying behaviour may not revert instantly, if you are able to win back the trust of your customers, the damage need not be long term.  

Managing risk and reputation 

Given the complexity of supply chains these days, maintaining accountability of your suppliers has long been an issue, especially when it comes to tier two or three suppliers. Yet just because this task is challenging, it doesn’t mean it isn’t important. Thankfully, if reputational damage does occur, it is possible to reverse it. But do we want to take the risk of finding out? 

Has your supplier ever ended up in the news? What did you do about it? Let us know below.

A Rare Opportunity To Reset And Accelerate

Will businesses go backwards due to necessity and survival or will they step up and push forward to go further and faster to achieve the right balance?


Many of us are in a post-covid state of mind, I most certainly am. But will you and your organisations come out of this stronger, weaker or just different? Of course, the crisis is still very much real, affecting many people and businesses with long-lasting effects.  Perhaps there are slight signs of a slow down in certain parts of the world but who really knows how things will fare without a vaccine. Either way, we have to overcome this and look towards the new normal, which I believe can be a better one.

The pandemic is surely one of the greatest affecting the world and for many it has or will be a pivotal turning point. On the personal side, it may bring focus back to the things that really matter, be it family and friends or health and lifestyle. Or, it may send you down a new path. On the business side, it may question the raison d’être and bring focus to finding the right balance between society, the environment and the economy. From certain perspectives, the pandemic presents businesses a rare opportunity to accelerate on digital transformation initiatives that have been dragging over the last few years. Not for the sake of digital transformation but rather to rapidly ensure more resiliency and hone in on or further develop competitive advantages.

Who better to bring balance, build resilience and solidify competitive advantages than Procurement and Supply Chain.

Balancing the Imbalanced

Until recently it would have been fair to say that most businesses operated in an imbalanced manner with regard to society, the environment and the economy. With the main focus being on economic development, too often at the cost of society and the environment. Of course, there have been big strides made in recent years to balance this out but the big question is – What Happens Next?

This is a pivotal point. Will businesses go backwards due to necessity and survival or will they step up and push forward to go further and faster to achieve the right balance? I do hope it’s the latter and guess what, I believe Procurement is a key player in this. How you spend can transform your business and beyond. Where a business directs its spend can make the difference between an unsustainable imbalance and a sustainable balance to develop society, the environment and the economy equally. I strongly believe (and hope) we’ll see more and more organizations taking a stronger stance on this issue. Be it stronger support or stricter policies around supplier management for sustainability and diversity or more efforts to improve the communities involved in and around a business. Overall, Procurement organisations can influence entire ecosystems of suppliers to develop with this balance in mind.

Building Resilience

Resiliency has always been an important business strength but naturally during times of crises, there is more focus on this. For Procurement and Supply Chain leaders, while this is very likely not a foreign concept, it is likely that they have not had the opportunity to fully execute on a strategy to be more resilient to external events. This is the opportunity to show real business value. Now is the time to show the business how Procurement can add value around supplier risk management, new sources of supply, changes to contractual arrangements and much more.

Building resiliency begins with suppliers but must involve collaboration with the business. How much information do you have on your suppliers? How well connected are you to your suppliers? Are you monitoring risk across your suppliers? Do you have a mechanism to communicate and collaborate with suppliers in times of crisis? Do you have a clear view of supplier hierarchy to understand parent / child relationships? Do you know who your suppliers subcontract to? The list of questions that need answering is long. Needless to say that Procurement must accelerate on its plans to digitally connect to its suppliers to get better information, better assessment of risk (and performance) and overall infuse the multitude of Procurement and Supply Chain processes with better supplier information to improve decisions.

Solidify A Competitive Advantage

Lastly, the opportunity to establish or further develop a competitive advantage is too great to ignore. Some may ask, how can Procurement help here? We have seen first hand from our customers that Procurement does, in fact, have a lot to contribute in developing a competitive advantage. There isn’t an easy answer, however, as it really depends on the business and industry. We have a leading telecom customer where procurement was instrumental in generating significant revenue. Another where Procurement impacted the financial performance of the company by launching more new products, faster and more profitably.

Procurement is a gateway to probably the most significant source of innovation that any company has, its suppliers. By harnessing this rich resource companies can build great competitive advantages but they also need the people, processes and technology to take full advantage.

Technologies such as strategic sourcing, procure-to-pay or full source-to-pay that are instrumental in managing spend must empower versus limit. Often however, software solutions are designed in a way that forces organizations to compromise due to the limitations and restrictions presented. For those organizations that are ready to develop a competitive advantage (and many won’t be, as they still need to attain a level of maturity), technology must empower the skills and ideas that people have to be implemented and executed. Technology must empower creativity, this is how a competitive advantage is both born and executed.

You Ask All Of Your Suppliers For A 5% Discount. What Can Possibly Go Wrong?!

What does best practice supplier relationship management look like? Not like this…


With sales at her company in freefall due to the Covid-19 crisis, the pressure was on for Sally’s* procurement team to reduce costs. In a desperate pitch to do what she could, Sally decided to issue a letter to all suppliers, asking for an overall price reduction of 5%. In exchange, Sally dangled the carrot of ‘to-be-determined’ commitments that the business would fulfill post-Covid. These could include, she thought, accelerated payment terms, additional volumes, or contract extensions.  

What could possibly go wrong, she thought, as she hastily finalised the letters and forwarded them on. Even if most say no, some might say yes and procurement will be lauded as heroes. 

We’ve all been in Sally’s position – or if we haven’t, we certainly can imagine being put in it. When faced with the pressure that a crisis brings, isn’t it always the best idea to at least try to reduce costs by asking for a discount? On the surface, it seems like a logical approach – all you need is for one supplier to agree and your effort pays off. But is it possible that taking such a black-and-white approach can end up costing you more than it saves you? 

Issue 1: Vague notions of success can’t be measured 

In Sally’s situation above, you could argue that ‘success’ looked like one supplier agreeing to discount. But what if they agreed to a 1% discount, would that suffice? Or if they agreed to a 5% discount without complaint, would you ask if you had done more? 

The problem with a strategy of ‘doing something and hoping for the best’ is that there really is no benchmark for what ‘the best’ is and whether it has been achieved. This leads to issues with measuring success internally, and naturally, the same question is always asked: how has procurement added value here? 

Issue 2: No discount is as simple as asking – negotiation will be required 

If achieving a 5% discount was as easy as sending a letter, then procurement would likely be out of a job. Herein lies another problem with Sally’s strategy – it’s unlikely that vendors would respond with a simple ‘yes’ or ‘no,’ leaving her to need to negotiate for whatever she could get. 

And these negotiations would not be simple. Those suppliers who may be inclined to agree would expect more clarity and certainty on any future commitments from the company, which could turn discussions sour, quickly. 

Those on the other end of the spectrum, however, may feel the need to explain why they can’t offer a discount, and may enter the conversation feeling defeated or exposed. 

Whichever way these discussions transpired, they would certainly be time-consuming. In an environment where time is money, you have to ask yourself what the small percentage gains you might secure are really worth. . 

Issue 3: Your supplier is in a crisis, too 

Supplier Management 101 tells us that we should treat our suppliers like we’d like to be treated. But is sending out a generic request the way we’d like to be treated, especially if we’re in crisis too? 

The answer is a resounding and obvious no. Any suppliers that Sally is dealing with would also be deep within this crisis, and may in fact be considering a price increase to save themselves. On top of this, a lack of personalised correspondence could be perceived as insulting to the relationship. The request might net a discount, but it would cost far more than that in future relationship capital. 

If Sally’s plan wouldn’t work, then what would? 

Step 1: Shore up your fundamentals 

In times of crisis, and indeed, in ordinary time procurement must have a clear goal and an execution plan for what is needed for the business operations to continue undisrupted (or minimally impacted) and more importantly, for creatively increasing value to the organisation. 

These are essentially the fundamentals required to maintain a strong supplier base and elevate procurement. From a pure supplier relationship perspective, engaging strategic suppliers to assess their crisis preparedness and ability to continue to serve the organisation is the first step. 

Step 2: Creatively and empathetically engage your suppliers

Once you’ve got your fundamentals organised, you need to engage your suppliers in strategic conversations about how to creatively increase efficiency, optimize processes quickly, reduce waste (of time, resources and costs), and where possible, decrease costs and deliver additional value. 

Beyond this, you also need to discuss with them what value is added,  how much, for how long, what are the contingencies. This will help you establish a win-win approach with short and long term impact. 

The idea is that a continuation of a growing partnership will drive the right behaviours, not just during this crisis but in the future. Supplier-driven innovation should always be a top priority to both procurement and the entire organisation. 

After you’ve finished your initial discussions (and note, these type of discussions should always be ongoing) use learnings from them across all other supplier segments. The behavior you want to drive here is ensuring suppliers not only want to continue doing business with you but are eager to strategize with each other during the crisis.

Going back to Sally’s situation, this approach works for a number of reasons. Even if suppliers couldn’t immediately offer reductions they will be clear on expectations and will be committed to perform at a high level and produce ideas for the company, while increasing supplier engagement and value as a byproduct. Suppliers will be willing to explore solutions to avoid disruption, which is exactly what the business needs. In addition to this, the effort expended is targeted so no time will be wasted and in fact, the time spent may even produce market intelligence that can be brought back to the business to refine their own mitigation strategies. 

Also, finally and perhaps most importantly, the role of the procurement will be elevated to a truly strategic function (with lasting impact) to the organisation.

Continue supplier relationship best practice? 

For procurement professionals that realised early that Sally’s approach wouldn’t work, none of the advice here on how to rectify it should come as surprise: it is, quite simply, supplier relationship best practice to treat your suppliers in this way. 

In fact, for organisations that already implement supplier relationship best practice, they may not even need to take these steps – throughout this crisis, their suppliers may already be knocking on their door with creative mitigation strategies. They may even be using this crisis to bring the relationship to the next level. 

But for those who are yet to establish supplier management best practice, this example provides the perfect reason why you need to. Supplier relationships are a key enabler to business success, and when they are strong, the risk of business disruption is greatly reduced. 

What have you done to strengthen supplier relationships throughout this crisis? Let us know in the comments below. 

Why Buying From Social Enterprises Is As Easy As A, B, C

If you’re looking to boost the sustainability of your category plan, try seeking out social-enterprise suppliers. While we all know change can be challenging, and some buyers are reluctant to shift from tried and tested suppliers, this simple A, B, C approach empowers you to make things happen – and support social enterprise with buying power.

Do you want a quick and easy way to get more sustainability into your category plan?

How about an approach that’s focused on suppliers rather than the scope of what you buy? The answer is to ‘buy social’ – purchase from a supplier that is also a social enterprise.

B2B social enterprises are increasing in number both here in the UK and globally. They’re a great way to promote sustainability because:

  • Social enterprises have a positive social or environmental impact at the heart of their business model.
  • Their scale is significant – they make a contribution of £60 billion to the United Kingdom’s GDP.
  • Social enterprises are more diverse in their leadership and workforce, and we all know that diversity is proven to help businesses succeed and grow.
  • Building social value into your supply chain can help your business attract and retain talent, enhance your brand and access new sources of innovation.

And the good news is that buying social is as easy as A, B, C!

A: Analyse Your Spend

Given that there are more than 100,000 social enterprise suppliers in the UK alone, there’s every chance you’ve already got them in your spend. Make sure you analyse spend before you start to source new suppliers – and get your Buy Social KPIs off to a flying start.

Once you have identified that existing spend, why not amplify the impact by highlighting these suppliers to your buyers and getting even more spend with them if you can?

Sometimes you will find them in unusual areas. One of my teams identified that we already used a local social enterprise for kettles and other household goods. We decided to direct more of our buyers to that cause, which meant increased revenues for that supplier – and all it took was an email from our procurement team.

B: Baby-Steps Approach Gets Quick Wins On The Board

Sometimes changing suppliers is a difficult thing to do. People can be reluctant to shift their spend away from suppliers they’ve used for years. So a baby-steps approach could help by giving your team an early success story to build momentum. Try starting with a low-risk category of spending.

Janette Evans-Turner, Head of Sourcing & Procurement at Zurich Insurance, quite literally took a ‘baby-steps approach’ when engaging with the social enterprise From Babies With Love. Members of her team identified a social enterprise they could use in a low-risk category of spend to ensure that there was a minimum of fuss – and they were able to redirect their spend from a mainstream retailer to a social enterprise.

‘It was easy to approach the buying department as the change didn’t seem that big,’ Janette reports. ‘When we explained to our colleagues in human resources the double whammy of benefits that the change to buying social with From Babies with Love could bring, they were chomping at the bit to get started!’

C: Commit To A Challenge

The final step in the process is a commitment to a target that you want to achieve. Companies such as Amey have put in place ambitious targets to increase their spend with social enterprise and the results have been impressive.

They signed up to the Buy Social Corporate Challenge, developed and delivered by Social Enterprise UK, to support this:

  • The Buy Social Corporate Challenge programme, launched in April 2016, is designed to make it as easy as possible to buy from social enterprise suppliers.
  • There are 24 high-profile businesses signed up to the Buy Social Corporate Challenge representing a broad range of industries – including built environment, financial services, technology and communications.
  • More than £65 million was spent with social enterprise suppliers by Buy Social Corporate Challenge partners in the first three years of the programme.
  • 100% of Buy Social Corporate Challenge partners in the UK rated the quality of their social enterprise suppliers as comparable or better than existing suppliers.

So why not follow this A, B, C process and see if you can start buying from a social enterprise or increase your spend with one today? Find out more about the Buy Social Corporate Challenge here.

The Secret of Successful Supplier Selection

Still using cost as a primary criteria for supplier selection? Our latest webinar shares all the secrets you need for success.

Have you been tasked with running a selection process for a new supplier but don’t know where to start?  Perhaps you’ve been using the same routine for years but feel it’s time to freshen it up?  Are the old ways just not delivering the outcomes you need?

In our recent Procurious-Ivalua Webinar, Critical Success Factors for Supplier Selection, our panel of experts revealed the secrets to how they get the outcomes they want from their sourcing processes. 

Here are five great take-aways from that discussion.

Supplier Selection – Get the Balance Right

Our panel reported that many organisations are not yet on a path that leads away a cost-driven focus.  Tech tools that are available to help with future cost modelling mean procurement can go to the market with uncertainty about this type of risk reduced.  When cost risk is managed this leaves the way clear for the road to value. 

A great example quoted in the discussion was a utility contract. The focus was on value rather than cost. It led to costs being reduced and also meant a more sustainable outcome was delivered. This lowered usage and introduced measures to promote sustainability. 

Can you introduce a selection process that balances cost, value and your organisation’s wider sustainability goals to select a supplier who is right for you?

Remember, One Size Doesn’t Fit All

Making sure a supplier is a good cultural fit for the organisation is a key requirement that all our panel members stressed.  Think about the impact of a cultural misalignment on your organisation’s reputation or brand.  

Cultures vary across the world and getting a cultural fit when you’ve got a global supply chain is hard. However, there are many things on which the buyer and supplier can agree. How about meeting with your supplier’s leadership team as part of the sourcing process? This would allow you to assess their management ethos to make sure that the cultural fit is there right from the start?

The unknown unknowns

Managing external factors and risks, particularly those that are not yet known, are something that supplier selection process is often expected to address.  All panel members reported the challenge of grappling with the unknown unknowns in the current period of global upheaval and change. 

The advent of technology-driven real time data is something panel members welcomed to manage supplier and supply chain risk.  It’s also a great way to check and monitor supplier financial health. 

Make use of the new tools that are available to ensure your organisation is prepared and have a backstop position to allow a response when situational or supplier risks change.

Be a customer of choice

When it came to the supplier-buyer relationship our panel had very clear advice.  Whether we’re a supplier or a buyer, we’re all looking of a return on the investment in the relationship we’re about to have.  Focus clearly on the outcomes both sides are trying to achieve. 

Make sure you put yourself in the seat of your supplier’s sales director – how can a contract with your organisation provide a supplier with the opportunity for fair value earnings or a sustainable revenue stream?

Start the conversation

Changing the way your organisation selects suppliers will not happen overnight.  When you’re engaging with stakeholders our panel advises you to talk in their terms not the language of procurement. 

Will the change you’re proposing add value?  Why will it improve customer experience?  Why could it safeguard or improve reputation?

So, go ahead and pick one of the secrets that the webinar panel shared as being critical factors for success and start that conversation with the business today.

A recording of the Procurious-Ivalua Webinar – Critical Success Factors for Selecting Your Suppliers with panel members Gordon Tytler, Rolls Royce, Stephen Carter, Ivalua, Fred Nijffels, Accenture and host Tania Seary, Procurious is available here.

Critical Factors for Selecting your Suppliers

What critical factors do you look for in your suppliers? What does an organisation have to offer to get their foot in your door?

When you think of procurement, and get beyond the savings agenda, then the first thing that comes to mind is managing suppliers. While employees may be the life-blood of an organisation, suppliers are definitely the nourishment and support that keep organisations alive.

Without suppliers and their extended supply chains, organisations wouldn’t have any raw materials to make into products, any products to sell, or anyone to deliver much-needed services. That’s why a good supplier relationship (or relationships) can be critical to your daily operations.

However, one bad apple, one flawed contractors could not only stop the seamless functioning of your supply chain. It could also harm those two vital elements for all businesses – trust and reputation.

Your Critical Factors

If supplier relationships are key, then surely procurement should be taking its time selecting the right ones. And given the importance of this, procurement also needs to be applying the right ‘critical factors’ when selecting their suppliers.

As has been discussed in the past on Procurious, there are a number of factors that must be considered when selecting suppliers. The only issue is that these don’t appear to have changed very much over the years, begging the question – is procurement doing everything it can to adapt these criteria in line with the external environment?

Sure, it’s high time that procurement was looking past the traditional criteria of cost and quality when making their assessments. But the truth is, there’s no getting away from them.

However, this isn’t necessarily a bad thing if they aren’t the only factors in the equation. As procurement professionals, you are probably only too aware of the myriad of other factors that you need to be accounting for, from cultural fit and financial stability, all the way through to ethics and sustainability.

So which are the critical factors that procurement should be using? Is there a list that we should all be looking at?

Join our Webinar

Help is at hand in the form of Procurious and Ivalua’s latest webinar, ‘Critical Factors for Selecting your Suppliers’.

Sign up now to join our panel of experts at 11am (BST) on Tuesday the 3rd of September:

  • Tania Seary, Founder, Procurious
  • Stephen Carter, Senior Marketing Manager, Ivalua
  • Fred Nijffels, Accenture Operations ANZ – Procurement & Supply Chain
  • Gordon Tytler, Director of Procurement, Rolls Royce

In the webinar, you’ll hear from a panel of experts on a range of topics including:

  • The importance of cultural fit in your supplier relationships;
  • If sustainability, social value and fair working practices are becoming more prominent for procurement;
  • What your suppliers are looking for in your organisation; and
  • How to start the conversation in your organisation to move away from just cost and quality criteria.

FAQs

Is the Critical Factors webinar available to anyone?

Absolutely! Anyone & everyone can register for the webinar and it won’t cost you a penny to do so. Simply sign up here.

How do I listen to the Critical Factors webinar?

Simply sign up here and you’ll be able to listen to the on-demand. 

Help – I can’t make it to the live-stream of the webinar!

No problem! If you can’t make the live-stream you can catch up whenever it suits you. We’ll be making it available on Procurious soon after the event (and will be sure to send you a link) so you can listen at your leisure!

Can I ask the speakers a question during the Critical Factors For Selecting Your Suppliers webinar?

If you’d like to ask one of our speakers a question please submit it via the Discussion Board on Procurious and we’ll do our very best to ensure it gets answered for you.

Don’t Miss Out!

This webinar promises to provide a fascinating insight for all procurement professionals into the Critical Factors you should be considering in supplier selection.

Make sure you don’t miss out by signing up today!

Best of the Procurious Blog – Five Best Negotiation Scenes In Film And TV

How much can you learn about negotiation by sitting on the couch watching movies? Plenty.

Shutterstock/ Fer Gregory

Want to become a better negotiator? You could diligently read up on the subject or attend some negotiation training courses, but for the couch potatoes amongst us, you might just learn more by watching some of your favourite films.

Negotiation scenes come in many varieties in film. Often they’re in the form of a hard sell (think Leonardo DiCaprio selling dodgy stocks in The Wolf of Wall Street), or a hostage situation (Tom Hanks negotiating for his freedom in Captain Phillips) or other life-threatening situations such as Mel Gibson trying to talk a suicidal man down from a ledge in Lethal Weapon.

But when it comes down to the nuts and bolts of haggling, the following five scenes give illuminating examples of how to win – or lose – in a high-stakes negotiation.

  1. Sticking to your final offer – Nightcrawler (2014)

Jake Gyllenhaal’s character Lou is trying to sell a video of a crime scene to Nina, a TV news manager. Watch for:

  • Lou being willing to haggle down to a certain level, after which he refuses to budge.
  • The power shift in the negotiation from Nina to Lou (aided in part by Lou’s creepy intensity).
  • Lou throwing in a number of extra conditions when he knows he has Nina beaten.
  • Best line: “When I say that a particular number is my lowest price, that’s my lowest price, and you can be assured that I arrived at whatever that number is very carefully.”

  1. Doing your homework before a negotiation: True Grit (2010)

In this Coen Brothers film, 14-year-old Mattie Ross (played by Hailee Steinfeld) shows what horse-trading is all about – literally. In order to raise money to hire a Deputy U.S. Marshal to help her track down her father’s killer, she approaches an auctioneer named Stonehill with two demands – that he buys back the ponies he sold he father, and that he pays her $300 for a horse stolen from his stable. At first, Stonehill laughs in dismissal, but Ross’s perseverance and detailed knowledge of the relevant law wears him down until he yields to her demands – plus a little bit more. Watch for:

  • The moment Stonehill mentions the valuation of the horse and hence kicks off the haggling process.
  • Mattie’s threatening to walk out on the negotiation and go to the law, causing Stonehill to adjust his offer in panic.
  • Best line: “I do not entertain hypotheticals – the world as it is is vexing enough.”

  1. Negotiating across cultures – Snatch (2000)

Warning: strong language.

When boxing promoter “Turkish” and his partner Tommy approach Irish Traveller “One Punch” Mickey O’Neil to ask him to participate in a fight, the prospect seems simple enough. The only problem is, Mickey (played by Brad Pitt) has an almost unintelligible accent. His price is the purchase of a fancy caravan “for me Ma”, and then proceeds to list off all the features he wants included in the deal … while Turkish and Tommy can’t understand a thing. Watch for:

  • Mickey’s impossible-to-understand list of caravan features. The video clip below includes subtitles, but cinema audiences had no such assistance when this film was released.
  • The bewilderment on Turkish and Tommy’s faces as they realise they don’t know what they’ve actually agreed to. The cultural barrier between the Irish Travellers and the other characters in the film is a running theme that goes far beyond the tricky accent.
  • Best line: “Did you understand a single word of what he just said?”

  1. Coercion – Ocean’s 11 (2001)

“Frank”, played by the late Bernie Mac, has been tasked with sourcing the transport needed for the team to undertake the crime of the century. The dealer names his best offer, and Frank appears to accept. So far, everything seems to be going smoothly … until the handshake. Frank extends the grip to a full 60 seconds, apparently crushing the car dealer’s hand while chatting amiably the whole time. The car dealer, desperately uncomfortable and in pain, abruptly drops his price before freeing his hand. Watch for:

  • The range of emotions playing over the car dealer’s face as he realises he can’t free his hand.
  • Frank’s feigned surprise and gratitude when the dealer drops his price.
  • Best line: “If you were willing to pay cash, I’d be willing to drop that down to seven-SIX-teen each.”

  1. The power of silence: 30 Rock (TV series 2006-13)

By simply sitting in near-silence and looking stern, grumpy babysitter (Sherri) is able to make Jack Donaghy so nervous that he doubles her pay for working half the time. Donaghy (Alec Baldwin) comes into the negotiation with his usual swagger, but Sherri’s silence causes him to blabber and rapidly cave. Appalled at his own performance, he confronts Sherri a second time. Watch for:

  • Sherri’s tactical silence when Jack pauses to let her speak.
  • Jack rolling his eyes when he realises how badly he came out of the negotiation.
  • Best line: “I made every mistake you can in a negotiation. I spoke first, I smiled … I negotiated with myself!”

Want to suggest some other films or TV shows with great negotiation scenes? Leave a comment below!

6 Ways To Prevent A Negotiation Blow Up

There’s no denying that negotiations can be tough. And the best thing you can do to lessen the tension and prevent a negotiation blow up is to be prepared…

Palms are sweaty, knees weak, arms are heavy…

No, it’s not the start of an Eminem song… (well, it is, but that’s not what we’re getting at!)

You’re preparing for a big negotiation with a group of key suppliers and you’re already anticipating a disastrous outcome.

Perhaps you already know the people you’re dealing with are difficult to work with, or you’ve heard about their reputation.

Or maybe you know your own negotiation skills leave a lot to be desired when it comes to crisis management.

Whatever the reason, there’s no denying that negotiations can be tough. And the best thing you can do to lessen the tension and prevent a negotiation blow up is to be prepared.

We joined a recent Negotiation Roundtable organized by CABL (Conti Advanced Business Learning), a firm that specialises in Negotiation & Influencing, on the topic of Emotions and Negotiation. We wanted to hear advice from a number of procurement and sales leaders on how to keep your negotiations sweet.

Giuseppe Conti, the founder of CABL, led the conversation by discussing how emotions can influence decision making during negotiations and the ways to increase effectiveness when this factor is taken into account.

  1. Practice mindfulness

If you enter into your negotiation like a coiled spring, chances are the spring won’t stay coiled for long. The calmer you are the calmer you’re likely to remain for the duration of the meeting.

Olga Guerous, VP Commercial – Mars,  recalled a confrontation she experienced early on in her career. A particularly difficult supplier, who’s emotions were “all over the place” became so angry that he was forced to “leave the room midway through a negotiation and remained in the corridor for fifteen minutes in order to calm down.

“He came back and apologised but the situation wasn’t redeemable and he didn’t get what he wanted. Losing his temper made him lose any power and control he had in the negotiation. Having full control of your emotions is a key benefit in negotiations.”

Paul André, Director Reduced Risk Commercial Supply – JTI agreed, recommending, low breathing and mindfulness to help create a barrier to your emotions.

  1. Practice what you’re going to say

If you’re nervous or apprehensive about an impending negotiation, there’s nothing wrong with rehearsing in advance, to ensure you come across as intended.

Regina Roos, VP &  Sales Segment Leader Mineral and Mining – Schneider Electric,  said: “In the morning in front of the mirror I smile and practice some conversations, particularly ones that help you respond to people that are angry.

“When you are talking you can’t see yourself.  When you look in the mirror you can practice your facial expressions so it is not ironic or sarcastic. I call it ‘the mascara moment’.”

Francesco Lucchetta, Director EMEAI Supply – Pentair, agreed asserting the ” importance of making people aware of emotions without showing them, making an effort to keep the exchange respectful and controlled”

  1. Be physically prepared

Regina Roos recalled working with a procurement leader who took a very unique approach to managing his negotiations. At the beginning of every meeting and regularly throughout he would direct participants to the bathrooms.

“The need to take a break, to go to the toilet can create problems and impact on emotions during a negotiation. It’s good to take a minute, recharge your batteries and re-enter the discussion with a fresh perspective.”

Olga Guerous agreed in the importance of taking regular breaks throughout the negotiation process, even if it’s simply a break in the current conversation.  “It’s a powerful technique, when emotions are running high, to completely deviate from that topic, particularly if you believe you are going to have minimal success. Switch to a less contentious discussion and return to the difficult point later, whether it’s in a few minutes or a few hours.”

  1. Prepare to be confident

Preparation before a negotiation is crucial to help regulate emotions because it gives you the confidence to calmly assert your position and communicate your key points.

Ifti Ahmed, Managing Partner – Titanium Partners, argued that the most important way to control emotions is through self-confidence. “Confidence comes from preparation. If you’re prepared – you’re confident. If you think you’re going to win – you’re confident. If you think you’re going to lose – that’s when the emotions come into it.

If it helps you, don’t be ashamed of preparing everything you have to say in writing and sticking to that script.

  1. Plan your stand-up routine

There’s nothing like a touch of light humour to diffuse an escalating argument. Alessandra Silvano, Global Category Director CAPEX & MRO – Carlsberg, explained that his favourite way to blow out tension during negotiations is to crack a joke.

“Of course it has to be tactful, considered and culturally appropriate but it can be a useful and powerful way to break the tension.  Be sure you are not offending anyone and perhaps keep it exclusively to jokes about yourself!”

  1. Pick your venue wisely

Location-choice can make or break the success of your negotiation. If you want to ensure all participants remain civil, calm and professional there’s nothing like a neutral or public space to guarantee best behaviour.

“I’m a very emotional person and I find it difficult to process,” said Alessandra. “The venue of the negotiation has a big impact for me. I try to pick a relaxing, informal setting, such as a dinner. In an office environment it’s easy to get angry. In a nice restaurant I’m more relaxed and it’s easier to joke around and control emotions.”

Eight Critical Actions for Managing Your Supplier Pool

Establishing a pool of preferred or pre-qualified suppliers is  a great idea as long as you are actively managing your supplier pool.  Here’s how it’s done…

Last year Government Technology published an article describing how the state of Colorado has turned to a process they call “mini-RFP’s” to streamline and expedite procurement in their IT category.

The author Jessica Mulholland reports the state performed a prequalification of vendors and awarded multiple contracts to address a “specific set of issues and implementations”.

This select group of vendors operating under pre-negotiated legal terms are solicited when new work comes up.  The lowest bidder is awarded leveraging their prenegotiated terms and conditions.

This is a concept that I have seen quite a few times before.  Many private organisations operate in this manner.  Essentially awarding MSA’s that include no rates or commercial terms, just legal terms.

It should be noted that the reason this is more expeditious is because it streamlines the contracting portion of the procurement process.  This isn’t a shortcut to procurement, you still need a scope of work, you still need a bid period, and you still need analysis.  The time saved is the time with legal.

Prequalification of suppliers isn’t anything new, but it is a unique approach in public procurement.  I’m no expert on the legality of this as a government practice, but I will address this from a private business perspective.

1.Agreements without Commercial Rates

Perhaps this is a nuance of the public sector and possibly the reason why the state of Colorado can have a closed bid, but in private business there is simply no good reason to have an MSA without pre-negotiated rates.  Nonetheless, I have seen this quite a few times.  If you are going to go so far as to negotiate legal terms, locking in rates and commercial terms should be a no-brainer.

2. Obstacles to inclusion

If you plan to add a pre-qualification process to your organisation, consider keeping the process simple and straight-forward.  It should not take more than a couple of weeks to complete the process.  Anything more than that and you may find that your process becomes an obstacle for inclusion.

3. Scale the Pool

Be sure to have a large enough pool to allow for multiple projects to occur at the same time without depleting your bench.  There is nothing worse than having an emergency project when all of your pre-qualified vendors are at capacity and you have no one left to award.

4. Diversify your Pool

Your pool of pre-qualified suppliers should be as diverse as the projects you contract.  When I talk of diversity here, I’m not speaking of minority owned businesses.  That is important too, but more than that you need to make sure your pool of vendors has large firms for the big projects as well as small firms for the small projects.  Don’t just include all the big guys or you may find you have no one at all.

5. Score Performance

If you are going to establish a pool of pre-qualified suppliers it’s important to score each performance.  Develop Key Performance Indicators (KPI) to evaluate how the suppliers performed and make sure to collect a report for each engagement.  This will give you actionable data to evaluate the performance of each supplier.

6. Aggregate and Report KPI’s

Grading the suppliers on each project is essential, but when you collect and aggregate that data across a year, now you have powerful data.  Anyone can have a bad project, but with a consolidated view of a vendors performance over a year, you can address specific problems, identify weaknesses, and generally grade each supplier objectively. With this data, you can elevate suppliers that perform well and downgrade those who perform poorly.

7. Evaluate your Pool at Least Once per Year

With your performance data in hand, you should meet with your suppliers annually and share the results of your scoring.  This may be a difficult conversation, but if you are basing your comments on facts, it will be easier.  In addition to reviewing existing suppliers, this is the time to look outside of your pool to identify new or up-and-coming suppliers to add.  You should also evaluate the state of your organisation to right-size your pool.

8. Update your Agreements

Above all else, don’t let agreement expire.  Track the end of all agreements and create reminders on your calendar to ensure you are proactively renewing, terminating, or renegotiating agreements before they expire.

Establishing a pool of preferred or pre-qualified suppliers is  a great idea as long as you are actively managing your supplier pool.  Keep on top of your contracts and you will soon see the fruits of your labor.

Do you have prenegotiated or prequalified Suppliers in your organisation?  If so, do you follow these recommendations?  Are there any best practices you recommend?  Tell me your stories.


This article was originally published on Luis Gile’s website. Check out more of his content here. 

Sign up for today’s webinar: Clean Up Your Act! Category Management AI-Style.