Customer Centric Procurement:

Customer Centric Procurement: Companies everywhere proclaim themselves as customer focused and publish statements in their corporate brochures emphasising their commitment to a customer-centric business model, both externally and internally.

However, many of these companies have yet to back these statements up by investing in the core capabilities, processes and systems necessary to maximize the opportunity to deliver customer value.

As procurement has risen up the corporate agenda it is increasingly beginning to take a role in product innovation and brand management. Leading companies are now starting to realize that a large part of their relationship with their end customers is in fact, defined by their own suppliers.

Supplier Relationship Management (SRM) is no longer just about consolidating the supplier base, establishing long-term contracts and leveraging spend potential. It is also about new product development, collaboration, innovation, total quality management and ultimately customer satisfaction.

For supply management this means:

1.    gaining early involvement in the product life-cycle management (PLM) process; and
2.    gaining access to fact based data regarding customer needs, experiences and preferences etc

The aim is to integrate the customer relationship management (CRM) and SRM processes to gain access to the customer experience and to provide inputs to differentiate the sellers products and services  from competitors via the supply chain.

Integrating CRM & SRM:

Supply chain management (SCM) is therefore absolutely critical to customer satisfaction, and a company’s suppliers may represent the single largest ‘touch point’ with customers, particularly in service industries. Each customer ‘touch point’ in the supply chain, presents a marketing and differentiation opportunity for the supplying organization.

It is therefore important that supply management fosters customer-satisfying behaviors along its entire supply chain by linking its business processes from customers through to its suppliers. This means focusing on data captured at the point of use. Ie. Demand driven data, taken directly from the customer touch points. However, whilst SCM concentrates on the efficient matching of supply with demand it does not help to identify what the customer perceives as valuable, and how this value translates into a customer value proposition.

Seen in this light SRM should be seen as an integral component of the CRM process.

On the sales side, a ‘customer care’ program typically not only collects information from customers, but also provides important data about supplier’s product and service quality. On the supply side, suppliers are also collecting customer information and performing ‘customer satisfaction’ surveys that can be used to complement CRM. By integrating these processes a much more holistic view can be utilized to identify strengths and weaknesses in the supply chain and take any necessary corrective actions as soon as problems are spotted.

 Procurement Driven Differentiation Strategies:

Supply management must now move to a higher level of cooperation by fostering closer integration with their organizations customer-facing functions to get closer to the customer themselves. The aim is to achieve:

1. Greater emphasis on internal and external collaboration between partners
2. Increased focus on value, creation and delivery
3. More stringent definition of customer satisfaction (all supply chain components have much greater performance expectations of all chain participants)
4. Faster decision making cycles

By understanding the supply chain from the customers perspective and building a network of suppliers who not only have the desired capabilities, but are also committed to both your organizations and your customers goals and objectives, Supply Management can add real value that supports growth, promotes differentiation and increases customer loyalty.

Nuff said …