Winning in Business is a Team Game: The New Competitive Advantage
Tennis is one of the most solitary of sports; one person battling it out on court against another. Whichever of them eventually emerges victorious, their achievement is entirely due to their skill, fitness, and determination. Except it’s not. Look up in the stands and you’ll see their support team: their coach, their nutritionist, their physio, their fitness trainer, their sports psychologist, maybe even their agent who negotiates their sponsorship deals. Every top tier player who lifts a Grand Slam trophy has a small army of people to thank for making it possible.
Business is no different. World events over the last couple of years have highlighted two things previously invisible to most people – the interconnectedness of things and the fragility of those connections. Most of the products, and many of the services, we consume every day represent the coming together of numerous components made by different companies in disparate geographical locations; a whole lot greater than the sum of its parts. Every company must be able to perform this alchemy day in, day out. Its supply chain is more than a market differentiator, it's the difference between survival and extinction.
Playing Nice is a Winning Strategy
At BusinessOptix, we strongly believe organizations should invest as much in creating an exceptional supplier experience as they do in creating an exceptional customer experience. Becoming your suppliers’ customer of choice should have the same priority as becoming your customers’ supplier of choice. We aren’t alone in this view. In an article entitled The Strategic Advantage of Supplier Engagement (https://news.gallup.com/businessjournal/169103/strategic-advantage-supplier-engagement.aspx ), global analytics and advice firm Gallup wrote: “Supplier relationship management is recognized as a key factor in managing corporate risk, and companies must manage it positively and proactively, with an eye toward becoming a supplier's customer of choice.” Similarly, Gartner’s Future of Supply Chain: Crisis Shapes the Profession report found 77% of surveyed companies were investing in deeper and more collaborative supplier relationships.
Gallup and Gartner’s research highlights an enviable list of business benefits which flow from creating these relationships, ranging from lower waste and rework, through improved planning, faster time to market, increased user satisfaction and lower costs, to increased agility and resilience. Unfortunately, many companies don’t get to enjoy these benefits because their supply chain processes are designed from a single perspective – their own. Just as focusing too much on meeting internal metrics and too little on making yourself easy to do business with is unlikely to create an exceptional customer experience, at the other end of your business it’ll also make you an unattractive prospect for your suppliers. The saddest thing is this is rarely a conscious decision but rather a by-product of organizational myopia.
Seeing Yourself as Others See You
It's time to ask yourself the hard question - do you know what it’s like to do business with your organization?
- Step one is to realize you’re not going to find the answer internally.
- Step two is to actively seek feedback from your suppliers and listen to what they say (and ask yourself “Knowing what I now know, would I want to do business with us?”).
- Step three is to redesign your processes based on what you hear.
Irrespective of which aspects of your business need attention, we believe there are some fundamental behaviors which form the foundations for successful supplier relationships:
- Be transparent. Share demand signals so they can get ahead of the game, with clear expectations of performance. A policy of “no surprises” is a good place to start.
- Be easy to work with. Transact with them in the way they want and make your interactions as frictionless as possible (for example, by increasing your use of digital channels). Always aim for clarity, simplicity, and consistency.
- Be fair. Always recognize – and reward - value delivered. Always acknowledge legitimate operational constraints. Don’t penny pinch, because any short-term financial benefit is far outweighed by the detrimental long-term effects of a purely transactional relationship.
- Be efficient. Don’t create work for them by having cumbersome processes. Like bad karma, it’ll come back to you before too long.
With modern supply chains, supplier relationship management (SRM) can be a daunting prospect. Most companies have a large, diverse community of suppliers and figuring out how to nurture and maintain the best possible relationship with each of them might feel like a disproportionate amount of effort. As a result, some companies default to supply chain management (SCM) and reach for a technology solution. We believe those companies are putting the cart before the horse. Yes, absolutely replace your technology to be as efficient and as effective as possible but do it in collaboration with your supplier base, as part of building mutually beneficial and mutually valued relationships. SCM and SRM together will pay you far bigger dividends than SCM alone.
You don’t need anyone to tell you that engaged, committed employees give far more than those who work for you out of necessity. Suppliers are no different. If the only thing holding your relationship together is a contract, chances are you’ll get exactly what’s in the contact and no more. Companies which are easy to work with attract and retain the best talent, have stronger ecosystems, and enjoy that enviable range of business benefits (higher quality and service, better support, improved planning, and lower costs, and so on). Given all that, why wouldn’t you want to be your suppliers’ customer of choice?