5 tips to maximize value from supplier conferences
Do you hold supplier conferences? Did they deliver value or not? I’ve participated in many supplier conferences in my procurement and consulting career. When done well, the buying company and the supplier commit to collaboration to innovate, improve value, drive out cost and improve productivity. When done poorly, suppliers walk away viewing your firm a nuisance and commit to finding a replacement customer who is more collaborative and offers better opportunities.
The days of bringing in suppliers as a group to demand lower prices, offering nothing in return, should be long gone. Hard core tactical approaches leave a poor impression and fail to deliver any value. I wish I could say we’re all smarter than that today, but there are many procurement practitioners from Millennials through Baby Boomers who pass along advice like “always get at least three quotes, let the supplier know you’re getting quotes and will go with the lowest to get competitive pricing” and “tell the supplier that you want a very high quantity, once you get the price, ask them how much for a lower quantity and say you’re getting it cheaper from their competitor.” Sadly, many managers still see suppliers as a source of incremental profit. Among the mistakes companies make at supplier conferences are:
- Ask for cost improvement ideas, but lack the capability to test, follow up and provide feedback to suppliers
- Make demands on sole-source, strategic suppliers when they have no leverage
- Fail to include suppliers in the messaging as a valuable stakeholder
- Make commitments with no follow-through
The most effective supplier conference I’ve ever participated in was with a retail company who ran the event like a shareholder meeting. The CEO provided the state of the business and the forward strategy. The CFO made a case for while the company is profitable, the profit is significantly less than in prior years. (The company was recovering from a bankruptcy and supplier engagement and support was a critical factor.) Marketing displayed the new products and fashion trends. Procurement presented the need for innovation and cost savings with a plan to work with each supplier that included a follow-up process. The suppliers were energized, focused and, over the next year, delivered on agreed goals to increase value delivery. Unfortunately, this is the exception to the way most supplier conferences are conducted.
5 Tips for Maximizing Value from Supplier Conferences
- Define the cost, innovation and value requirements during the event planning
- Include a company Sr. Management and a business overview
- Create 2 events
- One for tactical/leverage suppliers
- One for more strategic suppliers
- Assure that your firm can handle suggestions and have a quick feedback mechanism
- Follow up with every supplier to assure compliance
If done well, the meetings are well-planned and create an inclusive, collaborative environment that will drive your firm to be a customer of choice.
If done poorly, your firm will likely be considered a nuisance and targeted for replacement when a better opportunity comes along.
Which customer are you—core or nuisance?