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Sunday, 17 January 2016

How do you manage 'problem' suppliers?

One common complaint I hear when networking is "I'm having problems with my supplier(s)".
I thought it might be useful therefore to provide a checklist of questions you might want to ask/answer to understand more about the possible causes  - or to avoid it happening in the first place.

A word of warning - please don't assume that using this list will absolve the buying organisation of any responsibility or actions. On a recent supplier management workshop I asked a room full of buyers:

"What percentage of the time is the buying organisation to blame for supply problems?" 

I received answers ranging from 50% to 90%. That is they believed that at least 50% of the time the buying organisation was to blame for the undesirable situation! Not a statistically significant group size but interesting observation non the less,

Some questions to consider...

Problem
Before getting on the phone and shouting at your supplier, or even worse telling the world how useless they are, it might be useful to take a step back and assess the current situation:
  • What's the current situation
  • What's the desired outcome
  • Do buyer/supplier both agree with these assessments
  • How has the buying organisation contributed to the current situation
  • Is there any potential for misunderstanding of the language being used - for example when you say 'problem' do they hear 'niggle'? 
  • How was agreement about the current situation obtained - by email, phone, skype, face to face meeting, conference (there's pros and cons of all of these, but if it's a big problem to you I'd suggest you won't just be emailing them)
  • Does everyone who needs to from both organisations agree with the assessment of the current situation
  • Has an action plan been agreed to move from the current to the desired outcome 
  • Is the action plan in writing, and does it have milestones along the way, and clear roles and responsibilities identified
  • Has the action plan been agreed and communicated at the right level within both organisations to ensure the appropriate resources and support are available?
  • How will progress be monitored - it's no use finding out on the due date that there's been a delay just because you believed them, and haven't checked progress for 6 weeks!   
  • and so on   
Supplier Choice
Perhaps a little late now but worth saying that a number of problems arise because the selection of the supplier was undertaken without due care and attention. Questions to ask before selecting a supplier are therefore:
  • What do I want ie what are your business requirements (NB not just the specification but other aspects of the service to be supplied - payment terms, delivery time, support, response times, liabilities etc)
  • What criteria for selecting suppliers will I use
  • How will these criteria be weighted 
  • Which suppliers are able to meet my minimum criteria 
  • What evidence will I ask for to ensure they meet our requirements
  • How will I verify what suppliers tell me
  • Do I understand what is included in the price, and what will be charged as extras (often linked to being clear when identifying the business requirements)
  • How will I request a price that ensures it meets all my requirements 
  • What contract terms will I use and what are the implications of these
  • and so on
I wrote a blog a few years ago saying if supplier selection isn't done right right don't be surprised if you end up with someone whose only credentials are winning the egg and spoon race when they were at school!

Contract
The contract may shed light on the responsibility for the problem. That is it may very clearly state that it was your responsibility to undertake X and not the supplier's. 

Supplier Management 
I often use gardening as a metaphor for supplier management. That is you don't generally own a garden, and then leave the grass and plants to their own devices. You certainly don't then blame the plants when they get over grown, or fail to grow when you know you planted them in the wrong place, or failed to give them the right conditions they needed to flourish.

Suppliers require the same level of attention - they need planting, watering, feeding, pruning, mowing, weeding, replanting, uprooting, time in the greenhouse and yes sometimes to be put in the compost! It's no use getting frustrated with a supplier when you tried to prune them with a blunt knife, or planted them in a corner and forgot about them!

Buyer/supplier relationships are also like any relationship - you get from them what you put into them. Which means when there's a problem you can't:
  • Jump straight in, and blame the other person without understanding their point of view.
  • Suddenly say something is important if you've not been communicating or even measuring it as you've been going along. For example if recent response times are important how would they know that if you're always late in responding to them, or have allowed them to be very tardy in their responses for the last 6 months!
  • Keep doing what you've always done, and expect a different response.
  • Assume they see the situation the same as you do - there are 3 versions of any situation: yours, theirs and the truth!
  • Assume they are motivated by the same values as you, and therefore will obviously agree with the severity of the current situation.
  • Keep it to yourself and hope it will get resolved - escalation is very important - so too keeping everyone updated with progress. 
Finally, before taking action, you may also want to stand in the shoes of your supplier in order to get more insight on how they might be perceiving your actions, and the actions of your organisation.

I'd love your thoughts on other additions to this checklist, or other questions you have about problems you have with suppliers.

Alison Smith
The Purchasing Coach 
Inspiring Change Inside and Out (more here on why that's important)

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