Supplier Management – David Atkinson asks what you might be giving away to suppliers

We looked last week at the general thrust of the excellent article from David Atkinson’s Four Pillars website . Today, let’s look in more detail at his core argument.

As we said last time, he started with the example of staff from the large accounting firms  working for Government on tax issues. Does this give them an advantage when they return to their firms – and do they have in effect a conflict of interest when they are working for the Government?

But he then extends the argument into the private sector environment. If we’re engaged in a suppler relationship programme, and we’re trying to get closer to our key suppliers, might we be taking a risk with our own competitive position at the same time?  What we sometimes forget is that our suppliers will only engage in collaborative programmes if they see a benefit for themselves. That might take a number of forms, but as Atkinson says,

“Who gets the share of the spoils from the collaboration is a function of the commercial leverage (or power) each party brings to the transaction whilst, of course, all parties must ‘win’ to some degree or the collaboration will break down and fail”.

So one risk for the buyer is that the supplier gains knowledge (hard data, general  information or perhaps personal contacts) about the customer that can then be used against them, or at least not to their best advantage, in future negotiations or ongoing business. Is allowing a supplier to get too close to you in effect opening the gates to the Trojan Horse?

Atkinson finishes his piece by offering great advice to both the buy and sell side. In doing that, he highlights that the two parties often have different goals from collaboration. It’s not being cynical to think about this – by having awareness of the risks of collaboration we can guard against them. “Vigilance and realism” he calls it.

So on the procurement side, we need to calculate the risks of potential loss of leverage through allowing suppliers to get “inside” our organisations. We should always retain control and make sure suppliers are truly committed to the collaboration. But it is his advice to suppliers that should make us all think hard about the true nature of power in supply relationships, and what that means to collaboration, supplier relationship management programmes and the like.   Here’s a taste – but do read the whole article here.

“On the other hand, my advice to sales and account managers is to continue to seek access to your customer’s organisation; wrap your intentions to grow revenues and profitability in collaboration and the language of shared-interests...  Your presence on ‘the inside’ will make it extremely difficult for a competitor to gain access and you will be in pole position when it comes to helping the customer construct its tender documentation and decide on its bid evaluation criteria”.

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