Business relationships at their heart are all about people, when you put the commercials, the products or services, and the mechanism or process used to manage those relationships to one side.
Managing people-to-people relationships, whether with stakeholders or suppliers, through email chains and Excel sheets isn’t particularly effective. Especially when it comes to continuity and longer term collaboration based on mutual trust.
Sheldon Mydat, CEO of Suppeco is my guest this week to walk us through how stakeholder relationships and supplier development can flourish when these relationships can be managed in one single place.
Stakeholder and Supplier Collaboration Without Emails and Excel
Emulating relationships that are based on human behaviour is tricky to do with spreadsheets and presentations.
It’s highly subjective but it also is key to driving successful, incremental value. But this value often gets lost because it’s unstructured.
Sheldon explains how he built a tech platform based off the back of what he’s tried to build Excel formulas and macros to measure: the performance-related benefits to some of the more subjective areas of supplier relationship management (SRM).
Value Creation through a structured approach to SRM
The challenge of course is ensuring that everybody uses a given tool or process to work with SRM, instead of defaulting to type. So, what’s in it for the stakeholder or the supplier to use a digital tool?
If we look at contract and spend management, we’re looking at the bottom of the pyramid. But if we look at the top of the pyramid, we look at other ways to create value such as innovation, shared R&D, different areas of performance management.
The result is that these activities all drive the bottom line value at the bottom of the pyramid. Creating a structure and a visibility across all of this activity is key, so as those affected can actually see it bearing fruit.
Sheldon uses “just-in-time” (JIT) as a great example of how supply chains have been primarily driven by cost savings activities rather than collaboration. Bringing stakeholders across the whole supply chain into the relationship and to actively drive value and collaborate together is the opportunity to break this cycle.
The triangle between stakeholder, supplier and procurement
Sheldon cites an article from McKinsey about how digital procurement platforms can drive incremental value of between 3% and 10% annually because of the ability to drive instant collaboration between the three points of this triangle.
Having a structured process to work on whichever activity it may be is key, and part of that process is clearly being able to work in a platform that enables this.
Monthly or quarterly business reviews are often talking shops, and can be the very thing that holds you back because they are too rigid. The savings achievable through immediate and ongoing collaboration outside of formal meetings are real.
However, the discipline and the structure to log in and actually use the platform is key to success. Sheldon explains that there is a deliberate intention not to spam users with notifications, and to have smart links in any email communication to avoid the need for users having to log in and enter a password each time to check a project.
Is there a niche or sector that real-time SRM works for best?
Community-wide engagement is key, and ensuring that everyone is aligned that any digital collaboration platform is the single source of truth is absolutely essential.
While certain sectors or departments may be better resourced and tech savvy, the fundamentals for success are always to ensure that the process of how SRM is run and administered within an organisation is the secret sauce.
Sheldon cites the construction industry as one sector which has struggled in the past with SRM, but is now starting to make considerable strides to develop this.
How to convince CFOs to invest in something that doesn’t directly drive savings?
Firstly, savings expectations from the board will never go down, especially in an environment of supply chain volatility.
Suppliers are often better at collaboration and innovation than internal stakeholders, a) because they have a vested interest to be supplier of choice and b) because they see things with a fresh pair of eyes and can take their experience of how they service other customers.
Shared R&D is one example Sheldon cites as being an area where some big untapped opportunities can lie. Where there is a longer term relationship and high levels of trust, these savings driven by external innovations are often passed straight through to the end customer.
While it’s not necessarily directly price related, the value that something like shared R&D can drive to the organisation’s bottom line (through a better end product, for example) is clearly demonstrable after the fact.
Revenue or profit lost due to disruption is very likely to increase. Value driven through collaboration is a perfect opportunity to offset this.
So, in short, it’s all about a change of mindset in how savings (or wider value) is recognised by the business.