Procurement Transformation Blog

Procurement Transformation Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Seeking Innovation Through Supplier Experience Management

At Capgemini, we spend a lot of time with our customers helping them advance the maturity of their procurement organizations. At some point when certain levels of stability and predictability are achieved, and savings targets are consistently met, the conversation inevitably turns to innovation. But where might innovation come from in the procurement domain? In our 2012-2013 CPO Survey report, we wrote:

“What role does the supplier play in innovation? We believe suppliers can offer more than goods and services; to drive corporate innovation, we recommend development of a stratum of supply partners. However, our IDP survey found that four out of five suppliers are engaged too late to deliver innovative ideas and products. One explanation for the failure to involve suppliers early is that companies view ideating as steadfastly within its purview. This perspective then dictates the timing and level of involvement of suppliers.”

Let’s extend that idea for 2014 and beyond. Engaging suppliers late is definitely not ideal. But what else might be preventing suppliers from bringing you innovation opportunities? Let’s start by asking ourselves, how easy is it for them to engage with you at all?

If we were looking at the “front end” of the business, we would have a ready toolkit to answer this question: Customer Experience. For the last decade, the discipline of Customer Experience Management (CEM/CXM) has been slowly maturing as an increasing number of companies strive to make their customers’ experience of the brand, products, and services consistently excellent across channels. On the supply side of the business, however, this discipline is largely unknown.

What if the some of tools of CEM were applied to procurement? What might be achieved if companies proactively focused on supplier experience management (SEM?) as a discipline? Note that we are explicitly not talking about supplier management; we are talking about the concept of supplier experience management.

Let’s take a look at a few of the more common CEM tools used on the demand side and explore what ideas they might generate for your procurement organization.

  • Understanding a “Day In the Life”: Experience management teams often map a “day in the life” of a customer. What would a day in the life of one of your suppliers look like as they interacted with your company? What would their pain points be?

  • Defining Supplier Personas: Understanding customers and developing customer insights by mapping their journeys is often a first step towards defining customer personas: the shared traits of clusters of customers. Those personas, or customer types, then become the platform for strategies of increasing purchasing and loyalty to the brand in question. What types of suppliers do you have? What is the persona of those suppliers? Which personas are more valuable to you and why?

  • Developing Supplier Tools: Once CEM teams understand how customers behave, they seek to create tools that help customers have better experiences. How much time do you spend interacting with your suppliers? Which of those interactions would be more valuable to you and to your suppliers if they were digitized? What if you created the same kinds of self-service account management tools for your suppliers that banks offer consumers? What costs might you take out of your business? What activities and behaviors might you be able to better measure if you provided those tools?

  • Supplier Loyalty Programs: Most businesses establish some form of loyalty program for their customers. What about suppliers? Many companies segment suppliers based on the strategic level of their relationship, in order to determine where they should be investing more in specific suppliers. What if you went beyond that thinking to determine what you might do to increase loyalty other than awarding business? What if you segmented suppliers into platinum, gold, and silver tiers and gave them perks according to their tier? What sorts of perks might you give them? What kinds of behaviors would you seek to incentivize?

  • Insider Discounts: What if you offered your suppliers the same kinds of friends and family discounts you offer your employees? What kind of loyalty might that engender?

To be honest, we have seen a very small number of companies focused on this kind of innovation. But as the economy remains challenging in many sectors, and the obvious efforts are played out (supply chain optimization, contract renegotiation, compliance, etc.), perhaps a few forward thinking procurement leaders will look at the front of the business and think, “Why aren’t we doing that?”

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Tony Fross

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