Supplier Communication Best Practices

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Supplier Communication Best Practices
by David Bush
June 28, 2007
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During our user conference - Iasta reSource - we spent some time in break out sessions where users of different industries and disciplines could exchange best practice experiences. One that I moderated, and was very interesting, was regarding the concept of supplier communication for reverse auctions. This is an especially important topic in order to get significant participation in eSourcing projects and build the trust of the supply base. Over time, your suppliers will understand that this is the process that will be used and they need to embrace it to win business. From our group, we determined that suppliers have the following concerns about reverse auctions which manifests itself in FUD – Fear, Uncertainty and Doubt. In order to minimize these concerns, users should understand the and enforce best practices:

  • Communication: To the point of over communication, make sure they know everything that is going on.
  • Education about the tool, process: Point suppliers to external information or training. Build a template that explains why you have chosen this process and what your (and their) expectations should be.
  • Stick to plan and execute: Do not deviate from the practice, inconsistency will undermine the long term efforts.
  • Keep benefit cheat sheet with suppliers: For new buyers, arm them with a short list of why the company is using this technology. The first conversation with suppliers is when it is critical to explain the process accurately and with conviction.

Its all fine and good that you are getting all these great benefits from eSourcing like cost reduction, market visibility/transparency, sourcing automation/efficiency and knowledge transfer. So, what's in it for them? A legitimate question that should be properly communicated.

  • Less time to complete - Since this process helps the buyers be more efficient, the suppliers will receive more information, faster and result in a quicker award decision.
  • More benefit from having more upfront planning - Suppliers can be confident that the award process has been more thoroughly thought through and the chance of contract being awarded is very high.
  • Auction lets suppliers know where they stand more quickly with immediate feedback - Although suppliers may not like the price compression result of an auction, they cannot argue that against the reality that they are getting real time pricing and market position information. They have the ability to make adjustments, if they choose.
  • Transparency of process -There will be far fewer unknowns at the conclusion of the process from the supplier perspective. If other best practices are adhered to, they should be very aware of what was important in the award decision and also will know how competitive their pricing was, relative to other suppliers.
  • Better communication / more completeness - One of the more frustrating things for suppliers is trying to compete for business where they can sense the lack of preparation and can foresee the failure of the project. Better communication and data accuracy builds more confidence in the buyer goal and stronger participation.
This is a really good list of information for buyers to use but is only the result of 30 minutes of conversation. Other groups have other ideas that can help supplier outreach programs and build momentum for eSourcing adoption and participation. The best thing to do, is to use your eSourcing partner to start this process and build a nice document upfront. However, you should supplement it with your own ideas and industry specific reasons. The more you prepare for this process, the better your result will be.
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