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Why buyers should work towards 'unconditional procurement'

A holistic approach to suppliers

Based on my team’s experience in working with global buyers and suppliers, I believe the most beneficial buyer-supplier relationships are ones that are symbiotic in nature, where buyers help develop business capabilities and suppliers themselves provide value in return.

 

Corporations spend billions of dollars on a network of suppliers that drive social and economic benefits to their respective communities. The structure of an organisation’s supply chain and the procurement team’s spend goals drives the types of suppliers and capabilities needed. Facing today’s growing supply chains and constrained resources, I believe an ’unconditional procurement’ approach is necessary to succeed.

 

What does ’unconditional procurement’ mean? By unconditional, I mean an unrestricted and unreserved approach to procurement. Buyers often work with a variety of suppliers and treat them differently. These suppliers can range in scale and scope, from businesses with regional to international capabilities, from ones recognised as diverse and non-diverse. During the sourcing process, many organisations have requirements that vary depending on the type of supplier they’re looking for.

 

One of the biggest opportunities I have observed in managing multi-levels of suppliers from all shapes, sizes and backgrounds lies in unconditional inclusion. Buyers should have a high-level overview and understanding of every supplier, no matter the size. They should always evaluate suppliers in the same manner to understand their company – no matter what they deliver. Suppliers should not be subject to different conditions.

 

To promote a universal approach to procurement, this should be merged with supplier diversity and sustainability initiatives. Key stakeholders from different departments should come together under a larger umbrella of strategic sourcing and be incentivised under the same performance metrics.

 

To achieve this, procurement professionals should ask themselves the following questions:

  • How deliberate and intentional is your sourcing process?
  • Do you understand what your suppliers’ corporate culture is like?
  • Do suppliers follow their own employee handbooks or a code of ethics?
  • Do your Tier-1 suppliers manage and create a sustainable workforce to support your function?

The impact of including a broad base of suppliers and promoting engagement also determines long-term sustainability and risk to your supply chain.

 

On the buyer side, are you deliberately and intentionally holding stakeholders accountable for maintaining feedback on your suppliers? Bringing in category managers and the CPO can help improve your overall procurement process as they communicate with suppliers and bridge gaps within supply chains. Reviewing suppliers, getting their feedback and asking for theirs in return will improve your onboarding process, payment, engagement, request for proposal/request for a quotation and requisitioning processes.

 

Think about incorporating a feedback loop within supplier relationship management, and make sure everyone is held to the same standards. I believe if buyers are more intentional about unconditional procurement, suppliers and employees can work together to promote new ideas that drive down cost, increase innovation/speed to market and create more impact as a whole.

 

Daryl Hammett is the COO and co-owner of ConnXus, a SaaS-based global supplier management platform.

 

This contributed article has been written by a guest writer at the invitation of Procurement Leaders.

Daryl Hammett
Posted by Daryl Hammett

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