5 May 2021

Four steps to create true and sustainable commercial value from Supplier Management

After winning the buy-in of the business for your plans, you need to find ways to achieve the results you pitched

The first of our series of three blogs and webinars examining how to achieve commercial value from supplier management outlined how to win executive-level support for a programme. Now, we turn to how you can go about finding the value you said you would in your business case.

We discussed ways to achieve this with Daniel Cameron, CPO of Quilter, and Rob Hoad, Commercial Director, EMEA for State of Flux, during our recent webinar. That event drew a number of key conclusions: That delivering full commercial value is shaped by your supplier relationships, and that knowing your suppliers better is essential, as is understanding their willingness to collaborate to drive post-contract value.

Here we explore the four measures to take to achieve this:

  1. The first step is to choose the right suppliers to work with. The ability to uncover the full potential for commercial value - financial and non-financial benefits - is shaped by the relationships you have with your suppliers, so picking the right partners is key. To identify these companies, you need to carry out a spend analysis. Your strategic suppliers could be those with whom you spend the most money; on whom your business relies; and/or where your biggest risks sit. Finding the suppliers with the most strategic value will get you on the right trajectory to deliver on your promises.
  1. Next, find out if you are strategic to them and, if so, assess their level of appetite for collaboration. A degree of mutuality or reciprocity is required for any partnership to be successful, so pick suppliers where both sides stand to gain from working together more closely. You may already have suppliers who go above and beyond contractual specifications; while for others this kind of activity will represent margin erosion. If your business is a key account, your supplier is likely to want to invest in your partnership either now or in the future.
  1. The next part of this discovery phase is to understand your suppliers better. Procurement professionals need to act as a ‘good student’. They need to be curious to learn, observe and ask questions to find out what your key suppliers do and how - and your business’s part in that. Adopting a ‘black box’ approach - where you pay a vendor for a service or product but understand little or nothing about how they go about it - will fail to find opportunities to improve value.

Take the chance to ‘walk the value chain’ with your suppliers, talk to various account managers to ask what could be done differently and how you could be a better customer. If it’s a logistics supplier, ask to do a ride-along to understand how they operate and where you fit into that - what processes could be improved, what information are they missing? You might even find they have better technology or market intelligence that you could benefit from.

It is these discussions, observations and experiences that will unlock the insights that lead to value. So get your sleeves rolled up and find out exactly what they do and how.

  1. Finally, be clear about what you’re trying to achieve beyond financial gains and find out which of your suppliers share these aims. It’s incredibly useful to appreciate their culture, business drivers and corporate objectives to see what broader synergies there could be beyond the scope of the contract.


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To discuss how State of Flux can help your organisation deliver value through Supplier Management, contact us here or at enquiries@stateofflux.co.uk