When people hear the term supplier engagement, many jump to the thought of supplier development. But engagement goes far beyond just the measurement and improvement of existing suppliers. During my talk at Coupa Inspire this week, I’ll be discussing what I term “the new supplier engagement” (see related posts here and here). This includes the need to develop an unobstructed view into supplier engagement, one that factors into account many different priorities including new sourcing models, risk management (and the containment of risk), specification/demand management (and collaboration on requirements), and tapping supplier creativity in new ways to save money and to reduce risk.
One of the other tenets of the new supplier engagement is the need to put information discovery above all else in all elements of supplier collaboration. This can include, for example, exploring different alternatives for a particular sourcing event or category strategy, including questioning the notion for a rigid RFP that forces suppliers to “bid apples to apples.” And it can also include the opposite of supplier rationalization – at least in the information discovery phase of sourcing – by challenging procurement teams to evaluate more suppliers, not less.
In certain cases, these may even encourage the participation of additional vendors, such as commodity/raw material suppliers or even counterparties to a transaction that involves some type of hedging or third-party insurance/assurance for particular outcomes – as opposed to simply trying to reduce the number of suppliers as a set strategy. Ultimately, when it comes to supplier engagement, there are a few key takeaways that are essential to factor into account:
- Think of supplier engagement as a gateway – one that provisions the outside world for the business (and must keep an equal lens focused in both directions)
- Don’t discount the role of sourcing – but expand the definition
- Let the numbers do the talking for you (i.e., there is little room for “gut” or “experience” alone
- Put information and intelligence at the very core of what you do – prioritize it at all cost
Stay tuned as I continue to preview the highlights from my talk at Coupa Inspire. Spend Matters readers can register here for the event and get a discount for attending by using the code INSPIRESM.