Consider Business Culture When Selecting Suppliers

Spend Matters welcomes another guest post from Santosh Reddy of GEP

How do you source culture? I am of course referring to culture as an achievement or an advancement of human civilization, and not bacteria growing in a petri dish.

Culture is what defines groups of people for what they have been and what they are now. Cultures have been the reason civilizations either thrived or rotted away. The same goes for companies. Whole teams are dedicated within the HR functions of companies to develop, nurture, and sustain a culture that is unique to the company. And all for very good reasons.

Do an Internet search for the term “organizational culture” and you will find thousands of search results containing well-written and practical articles. Each article stresses how important it is for companies to differentiate themselves in an age where pretty much every new product or service risks being commoditized in a span of few months.

But why not just buy culture? Ask your sourcing teams for help! As weird as the thought sounds, it is only an extension of the supplier selection process.

In the current business environment, where no man, team, function or organization is an island, most things you need are catered to by someone else either internal or external to the entity you represent (organization or internal function). Suppliers form the core of a company’s survival by partnering with you to support your material and service requirements on time and in reasonable cost. These same suppliers can also bring their organization’s culture and value system with them when they work with you.

The various teams, departments, and functions of an organization need to have their own culture working in balance and in harmony with the organization’s overarching culture.

This is where an organization’s sourcing team can play a large role. Companies evaluate a variety of parameters before selecting the best suppliers. However, most of their communication during the selection process is with the suppliers’ sales teams. Sourcing managers should push for an evaluation of the account managers and key team members that will potentially work with the business users and help them assess what these people can bring to your company. Supplier teams, particularly their managers, are accountable to deliver all that is contracted, and how they do it reflects a lot of their organization’s culture. Sourcing teams should be evaluating not only prices, but also the teams they, along with their business users, will work with before closing on supplier selection.

In the short run, having a supplier team whose culture fits with or augments your culture is a critical factor for allowing the relationship and associated projects take off the ground sooner, with less cost and time creeps. In the long run, individuals and supplier teams tend to benefit a cross section or the entire organization. They look to work closely with business users, propose interesting ideas, and take up improvement initiatives on the organization’s behalf—which all leads to improved ROI and TCO.

End result? Business users are happy, supplier is happy, and sourcing managers are happy. Everyone benefits.

For more interesting thinking on procurement, visit the GEP Knowledge Bank.

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