11 Steps to Purchasing Organization Attractiveness:

11 Steps to Purchasing Organization Attractiveness: Being seen as an attractive customer is becoming increasingly important, it can bring substantial dividends to buying organizations and should form part of any collaborative SRM strategy.

However, collaboration strategies and hard-nosed negotiations can be perceived as opposite ends of the supplier relationship spectrum, each with its supporters promising rich rewards through savings and increased value-add. So how should buying organizations go about increasing their attractiveness to suppliers?

CPO’s can develop high levels of attractiveness to suppliers by adapting the following principles into their SRM toolkit:

1. Clear policies and process:

If the purchasing department is responsible for the sourcing process, but the organization gives tacit approval to operations and technical staff bypassing it to influence buying decisions. Buyers will lack credibility and suppliers will adjust their sales tactics to exploit them. The buying organization is will not obtain best value, and supplier attractiveness will be adversely effected.

2. Real competition:

Unless companies successfully demonstrate that they will change current relationships, and then competition is stifled, and suppliers will not take your RFx seriously, and both innovation and attractiveness will be diminished.

3. Identify the key suppliers:

While you will wish to apply minimum standards, applying equal levels of attraction to all suppliers is unlikely to be appropriate. Identify which relationships matter and develop collaborative strategies to maximize the return received from them.

4. Attraction is not a static state and requires continued effort:

You will need to work consistently towards defined goals to be seen as the most attractive customer to your key suppliers.

5. Manage perceptions:

Perception is reality. Pro-actively manage the “gossip” and “rumor” about a supplier with internal stakeholders, and about your organization with suppliers.

6. Be demanding but fair:

Insist on performance, but do not insist on overly onerous terms that increase suppliers cost and risk unnecessarily, and reduces attractiveness. If desk-thumping negotiation is your only tactic, such a blunt instrument will eventually result in relationship difficulties.

7. Increase suppliers comfort levels:

Make sure that suppliers know that their ideas are welcomed, acknowledged and evaluated. Make it easy for suppliers to be innovative and reward them by being equitable, ethical and always honor contractual commitments.

8. Help the supplier to evaluate the value of your account:

Many buyers seek to hide information, but keeping information from the supplier inappropriately can result in a flawed evaluation and diminished attraction to both parties.

9. Command preferential access to supplier’s resources and ideas:

Develop the reputation of being the most open customer to new ideas, by systematizing the evaluation process and implementing as many as possible. Develop metrics that support implementing supplier ideas, and reward those responsible.

10. Customer – Supplier relationship alignment:

Just as it is important to align the objectives of supply managements, internal customers, it is just as important to understand and manage misalignment in the supply chain between your organization and its supply partners.

11. Leverage Innovation and Learning:

Encourage, your suppliers to use their experience gained with other customers in your organization. This will increase attraction, and your organization will be the place where new learning and innovation are brought.

Conclusion

The above points apply whether you are a large or small buyer and does not rely on the size of spend and volume alone to attract suppliers. Other factors such as business values come into play also, but the key point is that we can take real actions to make ourselves attractive to supply markets. Once you have evaluated your relative attractiveness, you can then market the benefits of doing business with your organization to suppliers and understand which other customers and initiatives are on its priority list.

Your strategy should be to be at the top of it.

Nuff said ….