Tag Archives: supplier relationship management

Smarter relationship management with ClientLoyalty

Procurious caught up with Kent Barnett, Chairman and CEO of ClientLoyalty at ISM2016, Indianapolis USA.

CPOs worldwide recognise the need to keep track of supplier relationships to reduce costs, minimise risk, and uncover opportunities to grow their businesses. Voice of the supplier surveys are common, yet the technology employed is often archaic. Typically, stand-alone web-based surveys are sent out, with the results downloaded into spreadsheets and painstakingly interpreted by analysts. Subsequent surveys are often not linked to the ones that have gone before, and even if they are, it’s left to human analysts to make intelligent connections and interpret the trends.

“This is the gap we discovered in the business services space”, says Kent Barnett, CEO of ClientLoyalty. “Organisations rarely use data to manage the voice of the supplier process, and hence miss out on an enormous opportunity to employ a continuous improvement methodology. They also fail to put that data to work by translating the information into meaningful action.”

The potential impacts of failed business relationships are huge. For buyers, it means wasted time and painful switching costs, while for suppliers, it means churn. In Barnett’s words, “a revolving door is never good for business”. That’s why ClientLoyalty’s founders saw a need to create a supplier performance management system that would build long-term, meaningful relationships between buyers and suppliers.

How ClientLoyalty works

The easy-to-use system is built to optimise relationships through transparency. Users can input operational metrics (KPIs), which are reported using a simple green, yellow and red approach. The system gathers direct feedback and social sentiment, using in-built algorithms to scan the web and track suppliers’ reputation ratings.

The data is delivered in the form of alerts (risk flags), dashboards, and report-out tools. “We call it a data-driven solution”, says Barnett. “The system uses NPS (Net Promoter Score) and the AI generates recommendations on how to reduce detractors and raise your score. Six Sigma is another important part of our measurement methodology – it’s all about smarter relationship management.” All data is benchmarked across ClientLoyalty’s growing client base, showing the low end, high end, and where your supplier falls.

The artificial intelligence kicks in with recommendations on how to improve performance, and is one of the most valuable aspects of ClientLoyalty’s system. This aspect addresses the major gap and frustration many CPOs have with voice of the supplier surveys – there’s really no point in gathering data on relationship strength if you are not going to do anything with that information. ClientLoyalty’s automatically generated recommendations provide a factual base to create a targeted action plan that will improve supplier relationships and save you money.

The results

“We’re creating a business culture that’s based around accountable performance, one company at a time”, says Barnett. “The key is having clear and transparent communications, with the ultimate goal of turning business relationships into business partnerships.”

ClientLoyalty is software that optimises relationships between B2B buyers and suppliers, helping organisations continuously improve by analysing direct feedback, social sentiment and operational data to create stronger bonds of loyalty. If your organization is a buyer of goods and services and needs to manage critical supplier relationships, or a supplier of goods and services and needs to manage strategic client relationships, ClientLoyalty can help you connect with your business partners using data-driven management tools.

Challenges Ahead for Buyers Making Late Payments

Few buyers are aware of changes to late payment regulations, as well as the potential penalties for making late payments to suppliers. 

Late Payments Main Image

In the modern procurement world, there are many hurdles to timely payment that exist on both sides of buyer-supplier relationship. Overcoming these, and ensuring that organisations are not making late payments, is a key way to build good relationships.

New Hackett Group research has found that nearly one-quarter of all supplier invoices are paid late (Fig. 1). Despite the working capital benefits, only a very small percentage of respondents to The Hackett Group’s Payment Practices Poll, intentionally pay suppliers late.

Fig 1: Common Reasons for Late Payments
Fig 1: Common Reasons for Late Payments

Most payments are simply delayed by slow approval processes, late receipt of invoices, or technology problems. That being said, there is a continuing trend for larger organisations to extend their payment terms, or make unilateral contract changes aimed at slowing the payment clock.

Well over half of procurement organisations surveyed by The Hackett Group were not aware of legislation and government initiatives to encourage faster payments to suppliers. Further, because it is uncommon for suppliers to charge interest or fees for late payments, 76 per cent have no plans to pay suppliers for late payments.

In general, late payments have a proportionally higher impact on smaller suppliers’ financial positions. These may be the very same companies that buyers have committed to help grow as part of their diversity and supplier development strategies.

Why is there such a large disconnect? And what needs to change?

This disconnect has become an important economic issue for several reasons. Banking regulations like Basel III have tightened bank capital requirements and financing costs, thereby reducing financing funds available for smaller companies.

There is also a belief that money unnecessarily caught up in the supply chain counteracts growth in the economy (e.g., missed business opportunities, financial distress), causing additional concern.

Given the higher risk of financial penalties being incurred for late payments, companies purchasing goods and services from SMEs need to resolve any process issues to enable a more efficient payment program.

What can buyers do to avoid late payments?

Not only do late payments cause operational issues and loss of discounts for early payment, they can also hurt relationships with suppliers and result in financial penalties due to contractual obligations and government regulations.

Buyers should start by looking internally to ensure better communications, processes, and automation around the payment process. Payment organisations can also look externally, to their suppliers, to improve the payment process.

Although buyers are ultimately the main driver, suppliers can still influence the timing of payments through the use of various strategies. Buyers should work collaboratively with suppliers to implement both internal and external changes spanning from people to process to technology.

Learn more about Hackett’s Procurement Executive Advisory Program here

Laura Gibbons is a Research Director for The Hackett Group’s Procurement Executive Advisory Program. She has industry and consulting experience in areas such as purchase-to-pay, strategic sourcing, payment strategies, manufacturing operations, economic impact analysis, and organisational and process design. You can contact her via email at: [email protected].

Bringing Big Ideas to Fruition Through SRM

Why procurement organisations hoping to bring big ideas to fruition need to focus on supplier relationship management (SRM).

CPOs who want to supercharge supplier-enabled innovation need to be joined at hip with business stakeholders through common goals and KPIs. Together, we can drive down costs and find efficiencies using best-practice supplier relationship management.

According to CSCMP’s 2013 research, organisations that involve suppliers in the early stages of the product lifecycle are able to reduce product development costs by 18 per cent, and improve their time-to-market cycle by 10-20 per cent. It’s therefore a no-brainer to invest in the creation of a robust and sustainable SRM program that meets your organisation’s unique needs.

However, successful implementation of an SRM program requires both senior management sponsorship and a focus on change management. Culturally, your organisation needs to be open to new ideas and have the ability to look at existing arrangements differently. The key to success lies in a dialogue-rich environment, with continuous stakeholder engagement both internally and externally.

Four areas of focus for successfully implementing SRM:

1. People and culture – senior level sponsorship of the program and clearly defined roles and responsibilities for managing suppliers.

2. Process and systems – a process toolkit to reduce risk, improve performance and decrease total cost.

3. Strategy – total alignment of SRM goals and targets through joint business plans with suppliers.

4. Governance – managing strategic suppliers in the best-possible way.

Supplier relationship management sits at the very heart of driving innovation, and the success of any SRM program is directly tied to the ability of your team to truly connect with suppliers and uncover innovative solutions. Therefore I can’t stress enough the importance of investing in your team’s soft skills to boost their ability to seize innovative opportunities.

Finally, it’s my view that the most successful future leaders in procurement will be those who have mastered the intricacies of SRM and are able to demonstrate real value to their wider organisations.

Keith Bird_croppedKeith Bird is the General Manager at The Faculty Management Consultants, helping to support The Faculty Roundtable, an influential group of Australian procurement leaders, who gather to share their experiences and insights.

The Faculty will be hosting their ninth Asia-Pacific CPO Forum, the region’s premier procurement event dedicated to accelerating commercial leadership at the highest level. 

For more information on The Faculty Roundtable or CPO Forum, contact Program Manager, Belinda Toohey.​

[1] Tate, Wendy, The Definitive Guide to Supply Management and Procurement, Pearson: New Jersey, 2014.

Showcasing Your Big Ideas – Supplier Enabled Innovation

Ahead of the Big Ideas Summit 2016 on April 21st, we’re on the hunt for your Big Ideas. Keith Bird talks about how procurement can “crack the code” on supplier enabled innovation.

At the Big Ideas Summit 2016, which takes place on 21st April,  we will be asking our speakers and attendees to record their ‘Big Ideas’ live on camera for the whole of our Procurious community to see.

But we also believe that every single procurement and supply chain professional has a unique vantage point in the industries, communities and businesses they work in. You have been submitting your Big Ideas to us, and so far, we think they have been great!

Keith Bird, GM at The Faculty Management Consultants

Keith believes that, as the procurement environment changes, organisations need to make sure that they are seeking out new, innovative solutions, or risk falling behind their competitors. A key way of doing this is to work closely with suppliers, and leverage the benefits of supplier enabled innovation.

According to Keith, procurement is uniquely positioned to make supplier enabled innovation a reality. The profession sits in a position to communicate with stakeholders, but also has the ability to focus on new ideas while still focusing on cost consciousness.

Keith also argues that successful SRM is a critical element of supplier enabled innovation, and that leaders should be investing in their teams’ soft skills to aid this.

Connect with Keith at The Faculty website, and follow the company on Twitter: @TheFacultyHQ

How to Submit Your Big Idea

We don’t mind if you film your submission on your phone, tablet, laptop or PC. However, to help you out we’ve compiled a list of some of our recommended methods for reaching out.

Once you’ve completed your film, you can reach us by email ([email protected]); on Twitter (@procurious_) or via Google Drive or Dropbox (using [email protected]).

You can find all the information you need on recording and submitting your Big Idea here.

Want to know more about Big Ideas 2016? Then visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.

How Technology Can Drive Supplier Collaboration Goals

Supplier collaboration basically means that your goal is to communicate better, and work more closely, with suppliers for the best possible project execution.

According to Deloitte’s 2016 Global CPO Survey, one of the main goals for CPOs is to increase supplier collaboration. What is interesting, and slightly uncomfortable, is that the study also found that 60 per cent of CPOs do not have a clear digital strategy. To me, it seems that when you talk about communication and collaboration, technology is the the clear answer.

Collaborating involves many ideas that ultimately result in a partnership that works better together:

  • Communicate better, faster and more effectively.
  • Create a simpler procurement process between partners.
  • Define clear expectations from the beginning.
  • Share performance data for improvement.

Tactical solutions for these are seemingly very easy. But you can tackle these goals one by one, or face them all by considering the digital options you have. Many people believe increasing supplier collaboration can be accomplished by being more available, or just simply sharing more information. It isn’t just what you do, but how you do it.

Connectivity is Everything

There is a very real opportunity with procurement technology to solve your collaboration problems. Technology connects people in a way that was impossible in the past. Continuing to use old methods to communicate will hold you back on your collaboration goals.

Look at it this way. It’s already difficult to communicate internationally, so improve the way you communicate by eliminating the polluted email accounts. New procurement technologies are developing collaborative features such as live chatting.

What will really allow you to collaborate better is being easily accessible to suppliers and being able to connect to quickly. In turn, all your project communication is redirected onto your system rather than being spread thin in between emails, phone calls, and post mail.

Define a Simpler Procurement Process

Rather than saying “work better together”, you should be working towards making your entire procurement process simpler in order to collaborate better.

The complexity of working in procurement is extremely challenging, and even more so as CPOs try to implement new strategies to optimise operations. Organisational skills are very important for procurement professionals, so leveraging technology to help manage the complex processes can be incredibly valuable. You ultimately become a low maintenance customer to your supplier.

Even the smallest tasks, like simplifying document sharing can eliminate frustration. Create a hub for project related documents which can be updated, rather than engaging in the email document attachment dance.

You should think of the idea as redefining the way you do things to eliminate lengthy tasks and replacing them with short ones. Your team and suppliers would appreciate simpler processes, allowing you to both finish routine tasks quickly and reduce lead times.

Establish Clearer Expectations

With many options coming out into the procurement technology market, it is less valuable to try and tackle your challenges one by one. So if your goal is supplier collaboration, you should consider ones that allow you to invite suppliers to be a user.

A workflow management system that gives access to your suppliers can really close the gap. With access, suppliers can see your workflow, their role in the project, and keep track of progress.

Sometimes it is difficult to communicate compliance issues and other important information regarding the partnership and the roles suppliers play in the projects. Using technology to document clear expectations optimizes clarity on both ends. Suppliers understand what is expected of them and you can feel more comfortable knowing that. It opens the door for trust.

Data is Your Friend

Performance data is very simple to gather when automated. Giving constructive criticism should be an important component to your supplier collaboration strategy. Suppliers need to know key areas for improvement so that they are aware of your expectations and given a chance to better their service.

The most accurate and effective way to show performance is to provide data. Collecting scorecards regularly can keep track of trends that can tell you if your SRM is working. Awareness is only going to help your partnership so you need to collaborate to make sure you both are working towards improvement.

There are many options for procurement organisations, but essentially, the type of system you choose to deploy depends on your main goals. It’s time we stop looking for quick fixes and look for opportunities in technology to meet our goals.

If you’re looking to improve your supplier collaboration, Winddle is a collaborative solution for sourcing and procurement that can absolutely help make your goals a reality.