This is a guest post from Paul Caris who is the CIO at international law firm Eversheds. His ability to get the most out of his suppliers without bullying or threatening them is legendary so here’s Paul’s take on what he looks for in his suppliers.
It has been suggested that the way we manage our suppliers at Eversheds is somewhat unique and that we may have some tips to share to help suppliers approach organisations like ourselves in order to establish and maintain valuable transacting relationships.
However, when I considered what we do differently I realised it’s as much about how our suppliers manage themselves as it is about how we manage our supply chain, so here are my top five tips that I think you should embrace.
TIP NUMBER 1: Don’t call your relationship a “partnership” if it isn’t.
Partnership is the most over used term in a supplier / customer relationship. A partnership is where all parties have the same interest in success and equal amounts to lose and gain. This is very rarely the case when suppliers have many customers and organisations have many suppliers.
Over use of the partnership tag line will raise too many expectations. I believe you should be candid with your suppliers, have a rating system and let your suppliers know how they sit on it.
I also like to make our future intentions towards them clear: retain, grow or exit.
If you plan to exit a supplier then let them know, you can then have grown-up conversations to avoid unnecessary costs on both sides in managing a situation that will end in termination.
If growth or retention are your objectives then try to understand the revenue recognition model and how the supplier is rewarded for performance. By understanding the supplier’s commercial make-up you may find it possible to help the supplier achieve their financial goals without too much compromise. Discover if cash-flow is more important than a month-end target. Is revenue growth more important than gross margin? Your supplier will respond well if (without compromising your own commercial requirements) you can help them achieve theirs. The key is to become a valuable customer.
So there you have it. If you are a supplier be honest; ask to know your position and what the future looks like; share what is important to you and try and establish a mutually beneficial relationship. Oh, and avoid banging on about “partnerships” all the time.
TIP NUMBER 2: Do not diss your competitors
This one is very important: never say a bad word about your competitors.
It just makes you look vindictive and offers nothing to your client other than the opportunity to gossip. Also it’s insulting to the customer when you talk about your competitors and their lack of quality, features or services; it suggests that as a customer we are too lazy or too stupid to do our own market analysis.
It is equally frustrating to hear relentless arguments about the risks or issues as a supplier you can solve, instead find a way to understand the value you can bring to your customer. This is all about asking the right questions and then listening to their answers.
TIP NUMBER 3: Get to know the decision makers.
This is an obvious tip however many sales representatives spend their time trying to create an often fruitless connection with the wrong person!
As an example: although I am accountable for all the purchasing decisions in my organisation, I very rarely make them. I accept the recommendations made to me by my teams. There is very little point inviting me to play golf or go out to dinner as it won’t be me that you need to impress. Moreover I have little time for a supplier who attempts to influence me over my team or my boss. Some of the larger IT suppliers in the past used to reward their sales representatives if they went “over the head” of their contact if they weren’t getting the results they wanted. Thankfully I haven’t witnessed this type of behaviour for some time, however, if I did the supplier would quickly end up in the exit category.
As a customer punch above your weight. Get to know the suppliers executive team and the CEO. It is your right, you pay their wages, nothing is more powerful than having a connection with the CEO and that all important mobile number for emergencies. And of course as a supplier make sure you introduce your clients to other people in your firm especially your boss.
TIP NUMBER 4: Empower your negotiators.
This is my pet hate.
If despite the tip above I am meeting and negotiating with a supplier directly I expect the individual on the opposite side of the table to have the empowerment to negotiate on their company’s behalf. It is infuriating the number of times a supplier sends a sales representative that says “I’ll have to take that back” when presented with a perfectly reasonable offer, which is subsequently accepted.
The amount of time wasted by the wrong level of sales people being presented to senior customers is obscene. Make sure the right people turn up to commercial meetings with equal levels of negotiating powers to deliver a fruitful outcome.
TIP NUMBER 5: Bigger is not better
During a recession the ability for an organisation to be agile is a crucial prerequisite. The bigger a business gets the less agile it tends to become. As a customer in a recession I have learned that the ability to leverage the benefit of scale is far less important than working with companies that can change direction and make decisions quickly.
We have made a conscious decision to develop relationships with an eclectic mix of small owner run suppliers as well as working with the usual big businesses. They tend to be far more entrepreneurial and exciting to work with and so are very valuable to us.
If you are in sales for a big company; my advice is learn to be behave like an entrepreneur. If you are a small business; use the recession as an opportunity to demonstrate agility. If you are a customer, maintain only the most essential procurement processes in your organisation, be a customer that can act quickly on a deal, be a delight to sell to.