Knowing Supplier: Part 2

Published on 2014-11-26 11:28:59, author Kenneth G. Sullivan

I have a supposition and it seems to run to the very core of the function. Analysis conducted several years ago by the Aberdeen Group seems to confirm parts of it. The study identified that most CEO’s believe that there is tremendous value to be obtained from the Supply Management function - good news. But, and here is the bad news, it is rarely attained. It’s nearly 2015 and yet Purchasing and Supply Management personnel know less about suppliers from whom they purchase products and services than a decade or two ago - even with all of the tools and techniques that are currently available. I tested my postulate from different perspectives so as not to introduce bias.

From the buyer perspective, I frequently and randomly ask Purchasing personnel to tell me what they know about particular suppliers. The selection norm includes only well-known suppliers of critical commodities - which I figure should make for an easy response. I am aghast at the minimal amount of information that is known and provided on principal suppliers. Maybe even worse, the personnel have almost no details and documentation in which to refer. Also noted was that many of the inquiries are conducted with personnel who use such brand name purchasing software as SAP, Oracle and even Ariba.

From the supplier perspective, I inquired from several suppliers their thoughts as to how well the buyer community knows about them. The topics covered technical capability, new products/services, management strategies, quality improvement and the like. Nearly all suppliers stated that buyers are unaware of the information on the topics I addressed. In fact, most buyers had never even stepped inside one of their operational locations. Even further, few buyers offered any assistance to the supplier community in terms of supplier development or improvement. This is a huge performance and expectation gap (and at the same time a tremendous opportunity)!

If you accept the premise that Supply Management only exists because of suppliers, then it’s also true that the more Supply Management professionals know about suppliers the more invaluable they become to their companies (and to the CEO). I believe that this is what was plaguing the CEO’s of the Aberdeen study….that most Purchasing and Supply Management personnel could not add the expected value to their companies and organizations because, in large part, they do not know their suppliers.

If Purchasing and Supply Management personnel are waiting for other functions to conduct the strategic sourcing and award of business to suppliers then they are sadly mistaken. Engineers are capable on technical matters. Production personnel know operational planning and systems. But, only a specific group of professionals are university graduated and expertly trained in the field of Purchasing, Supply Management or downstream SCM and capable to conduct the external business of the company with suppliers.  

Next Up: What is Required to Know About Suppliers?

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