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The supply base may well stretch far and wide across the globe, but personal, face-to-face interactions between procurement and suppliers – where possible – are integral to supplier relationship management (SRM). Hosting supplier days are increasingly part of the function’s SRM strategy but how can these be conducted successfully?
Let’s look at a real-life example: based on lessons from the success of global beauty company Coty’s first Partner Day, here are three top tips to getting it right on the day.
A common pitfall procurement often falls down is simply assuming it should invite suppliers with the highest level of spend. But high value suppliers and strategic suppliers aren’t always the same thing.
As Coty procurement analyst Jessica Bennett explains, to identify the strategic suppliers, it was important to work with the different global category leaders to determine which organisations are crucial to the business’s strategy, irrespective of spend.
Once the right supplier organisations have been selected, it is then important to choose the right individuals from the supplier organisations. Sending an open invitation to the organisation could be risky, and individuals not relevant to the day’s purpose or the business’s strategy may turn up on the day.
At Coty, the decision was made that two representatives from the supplier should attend: the CEO and an operational member of staff. The reason this worked well was that the CEO is the key decision maker and so is essential when it comes to the strategic partnership with the business, while the operational staff has the in-depth understanding of the inner workings of the organisation and so is essential to the technical side of the relationship. Here, the important lesson is that, while the executive board is important, seniority should not always be the deciding factor.
The purpose of holding a supplier day can be any number of things – to draw innovation from the supply base, to reconnect with disengaged suppliers, or to find new suppliers with which to do business.
Whatever the reason, the message must be clear and consistent throughout the event and all internal attendees must be aligned with this message prior to the event.
For beauty giant Coty, the purpose of the supplier day was to ensure engagement and share its new culture and strategy with key suppliers after the business acquired the Procter & Gamble (P&G) Specialty Beauty Division. To get all internal attendees speaking from the same page, Coty’s procurement director Jean-David Hassan ran a benchmarking exercise meeting Coty employees of many functions and regions and aligning them around a common strategy.
Tempting as it can be to keep a supplier event exclusive to procurement, the function should resist the urge to keep suppliers all to themselves and instead invite other parts of the business. After all, marketing, R&D, finance and sales all play a part in supplier relationships and the business’s sourcing strategy.
At Coty’s Partner Day, plenary sessions were presented by the CEO, the CFO, the global chief supply chain officer, the chief scientific officer, as well as the CPO. Directly connecting different parts of the business with strategic suppliers creates both an internal synergy between procurement and other functions and also makes suppliers feel valued, showing them that they are true partners to the business.
The important thing to remember here is that a supplier event ultimately falls into procurement’s capable hands and so any cross-functional attendees need to be willing to speak the same language as procurement on the day.
While what works for one organisation can be somewhat different to what works for another, by following these simple steps, procurement can be on its way to winning over difficult suppliers and cementing relationships with others.
Procurement Leaders members can access a full case study (and many more besides) on www.procurementleaders.com.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.