In Part 1 of this post, we defined “CrowdSelling,” which is using your extended supply base to help you grow the top line. Yet, even just from a process standpoint, one of the easiest ways to do that is to use an SRM program and supplier survey to ask suppliers about any low hanging fruit that you can pick to create more revenue, more spend and associated spend improvements, and more competitive advantage brought to you by your friendly neighborhood procurement organization. Suppliers can be very useful in:
- Finding new market segments for your current products
- Helping you develop and tailor products for existing or new segments
- Identifying disruptive approaches and forces in the market
- Identifying potential acquisition candidates (beyond themselves)
- Offering ideas for JV, co-licensing or other types of partnerships
- Improving brand perception (e.g., sustainability, diversity, etc.) in local markets
- Making it easier for suppliers to help you grow by being a better customer to them (i.e., “help them help you”) and making sure they can support your growth plans
And of course, suppliers can help by actually being your customers! We’re not talking about improper reciprocity but rather suppliers being customers can certainly be a factor in managing strategic supplier relationships. For example, in Owens Corning’s case, they only have three strategic suppliers in China out of the 200 SRM-managed suppliers (roughly 400 suppliers of the 15,000 active suppliers represent 50-60% of the spend). These 200 suppliers are under active “account management,” and there is no reason why an annual “supplier business plan” shouldn’t include, in addition to their own sales targets based on your forecasts, how they can increase your sales.
The three strategic suppliers for Owens Corning are different though. Some are sizable customers, as mentioned before. They also do group buying together. They are doing co-innovation projects with them. You get the idea.
The biggest thing here is really a change in mindset to view the value chain holistically. In this example, suppliers can help you sell better to customers or become customers themselves. If you think about diversity in a global context, it’s not about country-based regulatory regimes but aligning supplier affinity/culture/demographics to that of customers. Broadening the view from single-tier supply chains to multi-tier value networks sounds very “consultese,” but there is sound economics behind the broader view. We believe that procurement organizations will have to work more deeply with their business/functional partners to model and manage these networks with the same quantitative modeling as in supply chain, but this is a post for another day. Stay tuned!