29 Jun
2021
Written by
Darragh Toolan

Why becoming a Customer of Choice relies on SRM

We've explored the priorities for becoming customer of choice using Diana Woodburn and Malcolm Mcdonald’s book on Key Account Management. But since their book there have been tons of articles which offer tips on becoming a Customer of Choice, and recent research shows that more time and money will be spent on SRM, so why is there so little change?

Cords and rings to represent a network

All I can see is that the two-way buyer-supplier relationship is still being dictated by the same old benchmarks: Price and Quality for the buyer, and Size of Order and Potential Future Order for the supplier.  So how, and when are the two sides going to join forces and become extensions of each other?

Frequent pain points

A recent piece of research found that we all have the same pain points in the buyer-supplier relationship.  I’ve done a quick summary below:

Willingness to Engage.

- Not investing time into the relationship
- Not being open to feedback, improvement ideas and innovative products & services

Execution

– Lacking a defined process for decision making
– Lack of accountability and ownership of tasks/projects
– Not enough internal stakeholder alignment

Communication and Collaboration

– No prompt feedback on proposals and innovations
– No openness to sharing needs, strategies, product road maps, structure and future demands

Relationship approach

– A short-term partnership
– Suppliers are not treated as equals

Prompt payment

– Lack of efficient processes
– Payment does not fall within agreed payment terms

To me, these pain points show a common theme: ineffective SRM.  Suppliers find relationships which lack efficiency, stifle innovation and leave little room for collaboration, painful.  So in order to maximise the chances of becoming a Customer of Choice, there needs to be an effort not to play on the supplier’s pain points.  We need to make sure that our suppliers feel like equals in our relationships, otherwise all our talk about becoming Customers of Choice may remain talk!

We should offer long-term engaging relationships, which are visible, transparent and well-planned.  We need to be able to communicate seamlessly with our suppliers and have complete transparency across the supply chain, performance and risk.  We need productive collaboration with our suppliers, and we need long-term relationships which are focused on value creation, not just price reduction.

The future of our function as it stands today, relies on our ability to shift with the times and understand that the next chapter is Value Creation.  The vehicle to this as-yet unrecognised value is SRM.

Published September 2015.

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