So, in the previous post of this series we talked about thinking of the supplier selection process differently, and how important is it to think about suppliers (read: partners) as part of our strategy, not just our operation. So, how do we select the right partner?

Well, the first step is to tweak the typical sourcing formula quite a bit. Instead of researching at the market to find some reputable “supplier” names first, you should start by doing research within your own organization. The idea is to try to identify all the pertinent stakeholders, and spend some time with them exploring those areas that may be impacted by establishing a new business relationship. During this preliminary phase, you share the goals of the initiative with all stakeholders, assess their specific needs, and establish how they relate to the initiative. Best-case scenario, you will generate alignment and buy-in from them; worst-case scenario, you will identify the cross-departmental priorities and recognize roadblocks to your selection process early on. In some instances you may even find that the organization needs something much different or complex than what you had in mind.

Once your stakeholder group has been properly engaged, you will have a much clearer understanding of what the ideal partner profile should look like. This will allow you to conduct much more powerful market research, and you will be able to engage and entice prospects more effectively. In this way, your qualification process is streamlined and less time will be spent on pre-vetting suppliers, making up for the time you spent gaining internal alignment.

Speaking of the qualification process, having a much more aligned set of candidates from the beginning will empower both sides to have much more significant discussions. A critical and sensitive area will be pricing; in a typical sourcing engagement, negotiations revolve around cost competitiveness, but a much more meaningful conversation would revolve around “value”. I’m not saying you should take cost and pricing out of the equation, on the contrary, I’m suggesting you take them to the next level. The idea is to work with candidates to define how their service or product-to-cost ratio is not just about being competitive in the market place - it also translates into direct measurable value to your organization. At this level of the conversation, the lowest price means very little compared to higher ROI, higher savings from a baseline standpoint, and promote innovation. From a strategic standpoint, what you are really accomplishing here is having them define how they’ll help your organization achieve sustainable growth, and what you are doing in return is establishing a commitment to set them up for success. Prospects who can speak in terms of ROI to your organization will be committed to establishing a longer relationship, because that means they understand your company well enough to work on sustainability and to eliminate roadblocks and resistances that are beyond transactional hurdles.

After you conclude the remainder of your sourcing process, you will decide to partner with one company. At this point, the level of transparency achieved during the discussion and the synergies created during the mutual evaluation process have established the baseline for collaboration, communication, and ongoing improvement; therefore, any performance metrics you decide to implement will go beyond compliance and revolve around mutual enablement.

The reason this approach works is because prospect companies (like any other entity would) will respond positively when they are engaged in an active dialogue (not a monologue). They have the opportunity to learn, respond, adjust and align, and ultimately be more accurate when tailoring their value proposition to you. This increases transparency, and of course, enables them to be more competitive and aggressive with their financials.

Listening to your stakeholders early on in the process will enable you to listen to your prospective partners better and maximize alignment to your organizational strategy. Process disruption is minimized early on by identifying and addressing resistances proactively and establishing risk management as a never-ending joint effort between partners. Needless to say, the benefits in the long-term can be pretty much endless, the sky is the limit.
Share To:

Diego De la Garza

Post A Comment:

0 comments so far,add yours