We spend a lot of time asking whether our suppliers are performing well enough.
Are they delivering on time? Is quality where it needs to be? Are prices competitive? Are they responsive when something goes wrong?
All perfectly reasonable questions.
But there is another question I use quite often when talking about supplier relationships:
Are we the best customer we can possibly be for our suppliers?
Or, put another way:
Do we make it easy to do business with us?
Because if we don’t, there is usually a cost attached to that.
It may not appear as a neat line on an invoice, but eventually the cost of complexity, poor information, changing requirements and constant firefighting finds its way back into the relationship.
Supplier performance is rarely one-way
It is very easy to look at a supplier who is missing delivery dates and conclude that we have a supplier performance problem.
Sometimes we do.
But before reaching that conclusion, I think it is worth looking at what we are asking the supplier to deal with.
- Are we giving them a reliable forecast?
- Are purchase orders being placed within the agreed lead time, or are we regularly asking for them sooner?
- How often do quantities change after the order has been placed?
- Do specifications remain stable?
- Are different people within our business giving the supplier different priorities?
- Have expedites quietly become part of the normal process?
Individually, none of those things necessarily feels significant. Taken together, they can make an account considerably harder and more expensive to service.
And that is where the conversation starts to become interesting.
If a supplier has planned capacity around the information we gave them and we then change the requirement, who owns the resulting delivery problem?
The answer is not always as straightforward as the supplier scorecard might suggest.
What does the data tell us about our own behaviour?
This is where procurement data becomes particularly useful.
Most businesses already collect plenty of information about supplier performance, either formally through KPIs or simply through the transactions sitting within an ERP or purchasing system.
What is less common is turning that information around and looking at our own performance as a customer.
Take delivery performance.
If the supplier originally agreed to deliver on the 30th and we later asked them to bring the order forward to the 20th, what date are we measuring them against?
If we continually amend orders after they have been placed, do we know how often that happens?
If the supplier is regularly being chased for urgent deliveries, can we see whether those requests were driven by genuine unexpected demand or by poor planning somewhere within our own business?
Forecast information can be particularly revealing. A supplier may appear unable to cope with changing volumes, but if our forecast is moving significantly every few weeks, the underlying problem may not sit entirely on their side of the relationship.
This is similar to what we found when looking at supplier spend analysis across multiple sites. The information often already exists. The value comes from bringing it together and asking a better question.
In this case, the question is not simply:
“How well is the supplier performing?”
It is:
“What does the data tell us about the relationship as a whole?”
Being difficult to deal with carries a cost
Suppliers have to manage uncertainty just like any other business.
If our demand is unpredictable, they may carry additional stock.
If our orders constantly change, they may have to build more flexibility into production or capacity planning.
If we regularly require urgent deliveries, they may incur extra freight or administrative cost.
If invoices are routinely disputed or paid late, that affects their working capital.
If specifications or priorities regularly change, someone has to manage that complexity.
Those costs do not simply disappear.
Some may eventually find their way into the price we pay. Others show up less obviously through longer lead times, reduced flexibility, more stock, poorer service or simply a relationship where both sides spend too much time dealing with problems.
That is why I think good supplier relationship management has to work both ways.
We should absolutely hold suppliers accountable for performance.
But we should also be prepared to look at what we are doing that either helps or prevents them from performing.
Would your suppliers describe you as a good customer?
It is an interesting question.
Most organisations probably know which of their customers are straightforward to work with and which are more demanding.
Suppliers are no different.
They know which customers give them good information, make sensible decisions, communicate clearly and pay as agreed.
They also know which customers change requirements at the last minute, constantly expedite orders and expect the supplier to absorb the consequences.
That becomes particularly important when capacity is tight or something goes wrong.
A strong supplier relationship does not guarantee that you will always come first, nor should it.
But if a supplier has limited capacity and several customers competing for attention, being commercially important is only part of the equation.
How easy you are to work with matters too.
This is where supplier relationships also connect to wider supply chain resilience. Resilience is not simply about identifying alternative suppliers or holding more stock. It is also about building relationships that are capable of dealing with change when it inevitably arrives.
Our procurement and supply chain advisory work with SMEs increasingly looks at that wider picture, because supplier performance, commercial behaviour, data and resilience are closely connected.
Better supplier conversations need a shared view of the facts
One of the biggest benefits of using data properly is that it can take some of the emotion out of supplier conversations.
Instead of:
“Your delivery performance isn’t good enough.”
we can have a much more useful discussion.
- What was originally requested?
- What changed?
- When did it change?
- How frequently does this happen?
- What impact does it create for both businesses?
- Where is the underlying cause?
Once both sides can see the same picture, the conversation becomes less about blame and more about improvement.
Sometimes the supplier needs to change.
Sometimes we do.
Quite often, both sides can do something differently.
And that is a much healthier basis for a long-term supplier relationship.
Are we the best customer we can be?
This does not mean accepting poor supplier performance or lowering expectations.
Quite the opposite.
Good supplier management should create clear expectations and accountability on both sides.
But if we genuinely want better cost, performance and resilience from suppliers, we should be willing to look at the whole relationship.
- How predictable are we?
- How good is our information?
- How often do we change our minds?
- Do we pay when we say we will?
- Do suppliers understand what matters to us?
And perhaps most importantly, do we have the data to know rather than simply assuming we are a good customer?
We spend a lot of time asking suppliers to improve.
Every so often, it is worth turning the question around.
Are we making it as easy as possible for them to perform?
Because if doing business with us creates unnecessary cost, complexity or risk for a supplier, sooner or later some of that will find its way back to us.
Could Your Own Buying Behaviour Be Creating Supply Chain Risk?
Our Supply Chain Resilience Discovery looks beyond individual supplier performance to understand how suppliers, dependencies, processes, data and your own ways of working affect resilience across the wider supply chain.
The aim is to identify where risk really sits, what may be contributing to it and where practical changes could make the biggest difference.
If you would like to understand what the data and supplier relationships in your business are really telling you, get in touch with Alliance Procurement Solutions.