Supplier collaboration: Turning the dial on the innovation and sustainability agenda

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We’ve seen from 2020 the importance of organizational resilience, both operational and strategic. The core to that resilience lies with our supplier/buyer relationships: operationally by making sure our suppliers can supply, and supporting them in doing that, and strategically by helping the business match future demand, maneuvering toward customer and consumer changes in need. What 2020 therefore has also highlighted is the need for nimbleness, speed and flexibility in doing that. And that is one of the reasons why supplier collaboration initiatives have become so important to the business, supply chain and procurement leaders.

The supplier collaboration approach differs from conventional supplier management in that for all parties involved, the goal is the same, and each understands their role in that ecosystem as facilitator of that end, be that sustainability, innovation or business continuity.

Over the past 10 years, especially following the financial crash of 2008, we’ve seen the industry try multiple initiatives to change its relationships between buyers and suppliers, and we’ve seen some success in small pockets, but very few are doing it well at scale. In the aftermath of 2020, this time it’s not an initiative — with the added impact of climate change, supply chain risk and the number of large companies under threat of going out of business — it’s an imperative.

The problem for many organizations is that on the whole they have not been engineered to work collaboratively, neither inside nor out. The desire and need to get to the point where collaboration makes strategic suppliers an extension of the enterprise with tightly aligned goals, is hampered by the silo way of working that is still very much at large — but technology can help.

There has been a shift in the past few years toward the increasing use of niche products, those that can do what the end user needs but without all the capabilities of an enterprise platform. If we are to do what procurement has been evolving toward — making supplier relationships that deliver value to the organization an integral part of our daily category management strategies — then the more simply we can do it, via the path of least resistance, the better. It’s important therefore that the tech to do that is easy-to-adopt, with a consumer-like UX, and which can bring people together to share ideas, rather than being viewed as an additional hurdle in an already complex problem.

The intelligence and experience behind this best-of-breed technology is owned by few providers in the market. One that had the foresight to start working on it 10 years ago now understands the topic perhaps more deeply than any other.

We spoke with Mark Perera, CEO, and Nick Pike, CRO, at Vizibl.

Why is supplier collaboration more important now?

The intention of the procurement organization today is to be far more strategic than tactical. Part of that intent lies with supplier collaboration, so that both parties can realize the same benefits from innovation, sustainability, maybe R&D expenditure, and avoidance of risk, particularly supply chain disruption.

“By working with suppliers, we can come up with far more innovative ideas than just automating the process,” says Nick. “We’ve seen firms attempt to build better supplier relationships by extending what they have done historically — automating transactional systems and improving their competitive approach to negotiation — but really the effect of doing that has limited success. So Vizibl focuses on the collaborative element.”

Mark adds that “businesses today, and particularly procurement functions, are starting to look at their ecosystems, and are reaching out to their suppliers, current and prospective, to help accelerate their key strategic programs, be they productivity, growth, sustainability or innovation.

“Traditionally, most firms have focused on a small pond of suppliers, their larger ones. Now, we see more organizations tapping into the smaller suppliers they may have worked with in the past, or start-ups, where the proof of concept or the innovation project might sit alongside some of the mega suppliers in their ecosystem. This might be to help transform how we do R&D in a pharma company for example, or how do we drive new sustainable packaging within an FMCG, but the important thing is, we really need to accelerate how we leverage the R&D of our suppliers.”

The stumbling block is that you can’t do that with spreadsheets or slide decks, and the strategic sourcing tools of the past, even most suites today, are pretty transactional in nature.

“Providers have been polishing the transactional part of procurement solutions for the past 20 years,” says Mark, “with new versions shinier than the previous, but ultimately all suites offer the same value proposition. What we are doing is working at a deeper level in the organization, looking at the strategy of the C-suites and how their teams align with their suppliers to achieve their ambitions, to work in unison with their tech and really turn the dial on their innovation and sustainability agenda.

“In our experience, traditional supplier management modules are pretty rudimentary, focused on performance and often given away as part of a suite, as such they are not well adopted within the organization. Often supplier management is managed by a procurement person, but there is little or no engagement with internal stakeholders — so it’s not the platform of choice, resulting in some operational performance management done on the platform, at best, but resorting to PowerPoint.

“So what we’ve created echoes the way firms are set up between the organizational leads, who own the relationships with suppliers, and procurement, who can help deliver the best practices and processes that are configured within the Vizibl platform. Ultimately it gives an end-to-end collaboration process for buyers and suppliers that aligns strategies and governance to build truly valuable relationships.”

To be at the forefront of supplier collaboration, you must believe in its impact

“Supplier collaboration is becoming ever more important as we go into several post-COVID years of crucial progress for big organizations as they adapt to change in their day-to-day operations,” explains Nick. “They must bring new products to market while in possession of a much more holistic view of the supply chain and its impact on the environment, and their key sustainability goals over the next few years are going to be significant if they want to help prevent further environmental damage.”

It’s clearly time to think about supplier relationships in a new way from the traditional drive for cost-savings and delivery times if we want to deliver change more rapidly. And we must think about them in both an internal and external light, as an intrinsic part of what procurement does.

“It’s most relevant now, “says Nick, “to think about extending the remit on what a supplier is bringing to an organization. Think about how you can benefit from the external support and sources of information they have to help you bring innovation that is more aligned with your objectives to market faster as you reposition your company for the future. And part of that is offering growth opportunities to suppliers so they can scale with your needs — not many tech firms can help facilitate that.”

So what differentiates the technology that can do that?

The trick is to make every aspect of the total supplier relationship transparent, so the business, and not just procurement, can align on governance and strategy and develop great ideas together that tie back to business value.

“This is a very important aspect of what Vizibl does,” says Mark. “Managing one or two strategic relationships well is a good start, but, being able to do that across all important relationships, the ones that will have a direct impact on your business, your future and KPIs over the next three or five years, is the key to delivering the programs that run the depth and breadth of the organization. So we are furnishing the CPO at the forefront of this challenge with not just a procurement tool but an enterprise tool that can help them align and execute their strategy.”

And this is why a tool built specifically for collaboration to bring everyone onto the same page must be easy to use, because cross-functional and external adoption depends on it.

We see many CEOs, CPOs and CFOs pushing their organizations toward some very ambitious goals, especially around the environment and sustainability, so they need non-transactional-based tech that can remove the hurdles and really smooth the path to expedite those goals.

“Vizibl was designed to allow lots of people to access it and be adopted by a broad set of people both within and outside the organization,” explains Nick. “For that reason it must be easy to pick up and able to present information that has been extracted, visualized and reported on in a simple yet powerful way so they look across a portfolio of projects. Speed and agility is needed to start delivering tangible results, so the time it takes to do something within a large P2P or ERP system needs to be dramatically reduced.

“Our goal is to work in a structured way with customers, and that means helping to define their strategy, put the right communications in place, install the supplier collaboration program, then bring in the supplier to generate a number of early wins against KPIs, which might be mutual cost-savings or hitting sustainability targets or driving innovation and ideas. But, importantly, to do it quickly, learn from it, and be agile.”

“As well as simplicity, our focus has also been on automation,” says Mark. “We invest heavily in R&D so that all the different parts of the relationship management process are automated. We constantly discover, innovate, optimize and simplify so that it can sit alongside the current technology stack, be agnostic to solution provider and be attractive to the end user.”

Procurement with purpose — you can’t have one without the other

Supplier collaboration for sustainability and innovation has largely been about compliance and box-ticking until recent years. But this decade will be dominated by being able to understand how you and your suppliers are performing, with a strong emphasis on a proactive approach to “procurement with purpose,” Mark believes.

“Working well with your suppliers quite often means steering them and the supply chain ecosystem toward what the new path is going to be. Diversity of suppliers is going to take on greater importance; the environmental, social and economic impact of our buying decisions is going to be scrutinized more, and these things will also differentiate our businesses. We need to be able to coordinate all of that with our suppliers. Procurement and sustainability leaders will need to work more closely, because the head of sustainability can’t deliver much if the suppliers aren’t aligned, so that will pen a whole new agenda for procurement and a whole new playing field for suppliers over the new decade.”

Helping procurement move with the business

Procurement will continue to polish its commercial model, and carry on with the operational activities that the business expects from them — whether from a savings, compliance or risk management point of view. But to weather the future, that is not enough. What Vizibl is aiming to do is support the strategic future of procurement, enabling the function to pursue and manage above-the-waterline initiatives that deliver real value back to the business, be that in terms of productivity, innovation, or sustainability.

“What we are really working toward,” explains Mark, “is helping forward-thinking CPOs drive top-line growth and deliver against their commitments, such as Davos or net zero targets with their suppliers. To do that we must vie away from the linear supply chain and move toward a network and purpose-led ecosystem approach in which each organization understands where they sit, in order to partner and bring new products and services to market. This is how we get closer to the end consumer, innovate at speed within our regional markets and close the white spaces we work in.

“The sustainability agenda has gone beyond the consumer, we are really starting to see CEOs and CFOs looking at how ESG is impacting investor behavior. It is the sustainability strategies across businesses that will be success levers, alongside procurement rethinking its spend impact — not just where it spends, but how it spends. To help the business transform against its productivity and sustainability growth agendas, procurement must be the glue that aligns strategies between the organization and the supplier. With advanced collaboration, procurement departments can leverage supplier capabilities and create an advantage for their companies, and this is why we see Vizibl not just at the forefront of where procurement is going, but also where the business is going.”


On February 3rd at Vizibl’s Sustainability Webinar, Mark will be joining executives from Heineken, BP and Colgate Palmolive to explore how enterprises can define and deliver transformational sustainability programs through supplier collaboration. Register to join “Sustainability through Supplier Collaboration: From green ideal to commercial imperative.”

 

This Brand Studio post was written with Vizibl.

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First Voice

  1. Tindo James:

    Supplier partnerships sounds like a great concept. Moet established players in the chemical supply chain have embraced this idea widely to an extend where partners carry each other’s products on their websites.

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