In a world that focuses on cost how do you know what value adds your vendors are giving you if you don’t encourage them to tell you?
Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.
One of the biggest gripes that suppliers have about procurement departments and Strategic Sourcing partners they work with is that they only care about getting the lowest cost and nothing about the value of what they are currently or can bring to the table. Unfortunately there has been a precedent set by the procurement and “reverse auction” companies that has rightfully created this gripe in many suppliers.
Yesterday we began talking about the VALUE of FREE and how suppliers need to do a better job of tracking this for their customers and reporting on it on a regular basis so that improvements can be seen and, if necessary, changes in process can be made. As we continue today we will wrap up by touching on a few additional areas suppliers need to keep in mind when working with their customers and the reasons why customers need to encourage their good vendors to do this.
Measure the results – As suppliers/vendors it is your job to keep track of the progress you are making. Do not assume that your customer is keeping track of the money you may be saving or the on-time delivery or the quality of product or the quick resolution of issues. It is your duty to ensure that you measure your success with that customer. Logistics companies: make sure you track the time between order to pickup to delivery. Service companies: be working on the ever important ROI on the very first day you begin working with your customer. Manufacturers: track the lead time for every item ordered by your customer and where possible, show where you have improved it. Never assume that your customers are tracking what you do for them but ALWAYS assume that eventually someone is going to ask what value you are bringing to them to justify your cost.
Track the extra and Toot the Horn – Right on the heels of tracking your results is making sure you record the little extras you bring to your customers. Whether you create extra reports, or visit the customer’s site to meet with their team, or you keep your staff over the weekend to assist with a critical issue, record everything and do not ever be afraid to toot your own horn to your customers to remind them of the extra effort they are getting from you. They may not realize what you have done and in time without you telling them they will come to expect it as part of the package and you will find yourself continuing to do more work for the same price.
On the flip side, customers tell us all the time that they don’t want procurement involved because their relationships are too important. Our response it always the same, “Great! Let us help you quantify what your incumbent is doing for you today so that we can compare that to what the market is doing for other companies.” Encourage your suppliers to record the extra things they do for you otherwise someone sitting in a very important office somewhere in your company is going to see that Company X is charging you $10 per widget when they know very well from their last job that Company Z only charges $8. Without documentation of the extras (with some measurable value attached) you will likely find Company Z and their $8 widgets as your new vendor and Company X out the door.
At SafeSourcing we are constantly talking to our suppliers and customers about the importance of value and that while cost cannot be ignored, the overall value is what are trying to pinpoint in the projects we run. The only way to accurately do that is to understand the “extras” a supplier can bring or is currently bringing to the table and attaching value to that. Only in this way can a true decision that is best for the customer truly be made. For more information on how we can help you evaluate your current or future suppliers and the value they can bring you or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.
We look forward to your comments.