How well do you know your suppliers?

Supplier selection typically involves a rigorous evaluation of potential suppliers’ capabilities. As well as technical suitability, suppliers may need to provide detailed information about their business operations. Yet even after supplier selection, how well do we really know our suppliers?

We expect suppliers to submit accurate pre-qualification information, but even this can be positioned into the most attractive profile. Or perhaps they were guilty of the sin of omission, concealing failures, weak management or business inefficiencies.

A visit to a (current or prospective) supplier is a great opportunity to get to know them better because so much is on display, intentionally and unintentionally. For example, you can meet a range of personnel that you would not normally meet during the bid process. This could be scheduled or unscheduled, and other functions often reveal much about the organisation’s true position e.g.

  • Operational managers, keen to discuss people, equipment and business continuity.
  • Quality managers, passionate about improvement and anxious about performance.
  • Human resources personnel, revealing how the organisation motivates and rewards people.

Supplier visits are a chance to complete the portrait that was sketched from financial accounts.  Financial accounts may have given you some signals about financial performance such as excess inventory, low wages, complex borrowing arrangements or slow cash flow. Your observations and questions can add a why, how and when to these topics.

Most importantly, supplier visits are an insight into the true culture of an organisation. Your perceptions have been shaped by the team you know. Your visit may reveal that this is not indicative of the whole organisation (for better or worse). The supplier view of you as a customer may mean that you have been allocated a high-performance “A” team, or the lacklustre division serving only your “difficult” demands.

One good way to prepare for a supplier visit is to take part in a supplier visit training simulation. A training simulation is a pre-established case study that allows delegates to plan and execute a visit in a role-play style setting. Supporting data and props bring the simulation to life and enable delegates to explore the obvious (and less obvious) aspects of knowing a supplier. The simulation takes place in teams, which adds competition to the training each team builds a model of the supplier’s operating costs. At the end of the simulation, we find out which team created the most accurate model and got to “know the supplier” better than their peers.

In an age when many procurement professionals are leveraging long term relationships for value, it makes sense to know your suppliers well.