50 Shades of Supplier Relationship Management – Procurement, Punishment and Pleasure

Attending the launch of Statess (providers of supplier management software) last week, plus the high-profile launch of a certain huge hit film, got us thinking about how we manage key business relationships, and the nuances, the pleasure and the pain of any relationship with another party with whom we have some sort of mutual dependency.

Thinking back to my experience over many years, since I was a veritable virgin of the procurement world, strategic relationship management, supplier management or whatever you want to call it (let’s stick with SM for now) contains an inherent and delicious yin and yang tension in terms of how we should manage our most critical suppliers. Almost invariably, even successful relationships contain pleasure and pain.

That’s because even if we are involved in very innovative activities with our suppliers, pushing and stretching the boundaries of what two bodies can do together, they need to be firmly tied to achieving the operational goals and deliverables we have set for them. Even if they fight against those ties, and struggle to break free with every ounce of muscle and sinew they possess, you need to ensure that they are firmly restrained to ensure that they deliver everything they have promised. That’s true even if at times, that might be painful for them, or at least for their P&L.

And at times, if they are not performing as you would like them to, SM means they have to be whipped into shape. Not too hard – you’re not trying to put them into a position where they can’t carry on servicing your needs in the future, or scar them for life, but firmly enough so that they know they have misbehaved. Getting that balance right is difficult, but essential.

I’ve often heard people say that they don’t like punishing their suppliers – through service credits for instance – because that will “damage the relationship”. But good SM is founded on everyone playing their role. And if you have said you will take a certain action if your supplier behaves in a certain way, you need to follow through on that, even if it is somewhat painful. Discipline is key.

But we have to recognise that in these key relationships, there is a time for praise, for more gentle encouragement – for stroking your partner, as it were. SM means we have to be able to tickle our suppliers as well as showing our dominance when it matters. Tease them with the prospect of more business perhaps, and make sure they get pleasure and reward from activities and actions, as well as you. This process has to be mutually satisfying.

In addition, we should always encourage them to tell you what they want out of the relationship – that is vital for a sustainable partnership, and who knows, can even lead you into new and even more exciting areas. Perhaps they have an idea of a third party who might join in and bring even more benefit to the SM game!

And at times, we have to combine toughness and tenderness - we like to think of that as the iron fist in the velvet glove, as it were. But do be careful, that can be a dangerous weapon if used in the wrong place (ouch)!

So do enjoy your SM, it can be hugely beneficial, but proceed with thought, planning and care for all parties ...

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