Network Fees and Innovation: Are You Considering Supplier Opinions?

The Spend Matters team has observed that in technology and supplier connectivity/network selection, the majority of procurement and AP organizations lack empathy (and total cost understanding) about the impact about their decisions on working with suppliers. In fact, many on the “buy-side” don’t even consider empathy and understanding with their supply base – they make decisions that are then forced on their vendors (thou shalt transact with us through this channel and this channel only!)

Yet suppliers are really important, especially in how they can engage with customers to lower their total cost of doing business. The auto-dispensing vendor managed inventory (VMI) kiosk that Grainger is currently deploying to early adopters such as Coke Consolidated is a great example of supplier innovation that can encourage the right type of buying and consumption patterns. In this case, Grainger faces a catch-22 – the solution may actually reduce consumption and spending (while driving SKU rationalization – not Grainger’s best friend!), but at the same time, it is likely to build tighter bonds with their customers.

Creative Partnering Beyond KPI-Driven Supplier Performance Feedback

Procurement organizations are only likely to extract the best value from providers in several areas (total cost, demand management, risk management, working capital, supplier diversity, even general ideation and creativity) by partnering with suppliers and truly soliciting input. These exchanges can’t be tightly scripted during quarterly or annual performance feedback sessions based on predetermined KPIs. They really count. But so does the type of unstructured and more frequent engagement that comes from picking up the phone or meeting in person.

The rest of this PRO research brief can be found on Spend Matters PRO. If you’d like to become a Spend Matters PRO member, please subscribe. If you’re not ready to subscribe or wonder why you should, we’ve answered some FAQs here or you can email a Spend Matters team member directly. If you’re not into paying for content, we get that too. Thanks for reading!

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