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Thursday, August 21, 2014

The Give and Take of Supplier Feedback

Kelly_Barner_2013In my Aug. 29 IMT Procurement Journal article (Save That Supplier During the Sourcing Process!), we considered the opportunities that arise when suppliers are provided with specific, constructive feedback that makes their individual bids more competitive and improves the overall RFx process results. Unlike the later stages of a sourcing process, the goal of supplier feedback is to keep as many suppliers qualified as possible – as long as the net benefit justifies the time investment made by procurement.

The article resonated with a number of procurement professionals, who raised very good questions about the feedback process. Most of the comments centered around two issues and included the buyer and supplier perspectives:

  1. Which suppliers are most likely to be receptive to (and act upon) feedback?
  2. What should procurement do when suppliers provide them with either solicited or unsolicited feedback?

Is Anybody Listening?

There is no question that procurement professionals are incredibly busy, especially as their responsibilities expand to include risk mitigation, relationship management, and raising percentages of corporate spend. If they take the time to provide supplier feedback, it should be done with the expectation that the feedback will have a material impact on the subsequent bids and proposals they receive.

As with negotiating leverage, a supplier’s likelihood to be receptive to feedback is directly proportional to its desire to win a contract. If a supplier would not be noticeably affected by not landing the business, it is unlikely to spend significant time updating an individualized proposal. Non-incumbent suppliers, however, may be more motivated if they see it as an opportunity to win new business.

Credit: Stuart Miles at FreeDigitalPhotos.net

Credit: Stuart Miles at FreeDigitalPhotos.net

Procurement’s decision to invest time in giving individualized feedback is similar to its efforts to segment the supply base to identify the companies that are collaborative partners. Not all categories of spend benefit from the additional effort and attention, and scarce time must be invested wisely.

That being said, in each sourcing project, there is likely to be a range of suppliers. Some are able to incorporate feedback and others not. If the more receptive suppliers have at least an equal chance of receiving the contract, providing feedback is worthwhile and must be done with all suppliers still in contention for the sake of ethics.

If procurement’s strategy for the category is to work with one or more collaborative partners, suppliers that are too large for individualized attention should be eliminated based on the fact that they do not meet relationship expectations. Ideally, this would be done before effort-intensive supplier feedback is provided so procurement can focus its attention where it will generate the greatest impact.

Are You Talking to Me?

Although the focus of my previous article was on feedback given to suppliers by procurement, the exchange of information should go both ways. Any justification for providing feedback to suppliers can easily be reversed to make the case that procurement should be open to receiving it themselves as a way of creating further value for the organization. As stated in a recent Directworks whitepaper, Creating Shareholder Value from Relationships, “any feedback should not be given in only one direction, but rather more of a bi-directional review.”

Not taking such input seriously is a lost opportunity for improvement.

The best kind of feedback from suppliers has a direct impact on the costs associated with product or service requirements and specifications. Examples include non-stock requirements, shorter-than-necessary turn-around or response times, and alternatives or considerations not represented in the bid that was distributed to suppliers. All supplier-provided feedback should be validated to ensure that a revision to the bid or a delay of the project is merited and not based solely on suppliers looking to skew requirements to their own advantage.

As with the feedback provided to suppliers, there is an ethics component to how procurement accepts feedback from suppliers. If the feedback makes a material change to the direction of the sourcing process but does not represent a unique capability of one supplier, all participating bidders should be given the opportunity to update their proposals so that the impact of the feedback is propagated for consistency.

Whether the feedback is being given or taken, the most important factor is the time to consider it. Time is required for any change to have an impact on the sourcing project. Post-mortem-style lessons are helpful, but since most contracts are multiple-year commitments, the payback is both diminished and delayed.

When planning the timeline for a sourcing project, procurement teams usually reserve time to compile and communicate feedback but might not allow significant time for suppliers to review and react. It is ultimately the suppliers’ ability to apply the feedback to their proposals that generates value for procurement and the category of spend being managed.

 

Kelly Barner is the co-owner of Buyers Meeting Point, at www.buyersmeetingpoint.com, an online resource for procurement and purchasing professionals. Her unique perspective on supply management is based on her time as a practitioner, a consultant at a solution provider, and now as an independent thought leader. Kelly has led projects involving members of procurement, supplier, and purchasing teams and has practical skills in strategic sourcing program design and management, opportunity assessment, knowledge management, and custom taxonomy design. She earned her MBA from Babson College, a Master of Science in Library and Information Science from Simmons College, and a Bachelor of Arts in English and History from Clark University. In 2012 and 2013 Kelly was awarded a Provider ‘Pro to Know’ award by Supply & Demand Chain Executive magazine, and in 2013 she was also recognized as one of 28 “Top Female Supply Chain Executives.” 

 

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