From Conflict to Collaboration: Becoming a Customer and Supplier of Choice
Keeping our customer promises should always be front and center of any organization’s efforts. But that is not easy to achieve when procurement and customer service —two sides of the same coin in improving supply chain performance— are not working seamlessly together.
It takes active listening and cohesiveness to go together and work toward the fine tuning of an organization’s supply chain. When that happens, we reach the sweet spot of becoming the customer that suppliers are eager to work with and sell to as a partner (customer of choice) and become the supplier that customers are eager to work with and buy from as a partner (supplier of choice).
Yet right from the start, lines are drawn. Procurement’s perspective is to stay within budget and never buy more than they must at the cheapest price possible. In the back of the team member’s mind is, “If I make my numbers, I get my bonus.” Customer service has a different perspective. Their overriding need is to meet sales quotas and growth targets, which translates to, “Sell all you can at the highest price possible and deliver it when and where the customer wants it—on time and in full (OTIF).
With so much dysfunction clouding the view, neither side can truly trust the other as a reliable source of information. And herein lies the tragedy. Without trusting each other, there are bound to be scores of missed opportunities for collaboration and innovation.
The major reason for the disconnect is that functional silo thinking dominates, and consistently sets procurement and customer service at odds. Often, these contentious cross-communications are unwittingly reinforced by organizational key performance indicators (KPIs) that are misaligned to a higher goal or strategy. The reality is that many departments find it hard to whittle down their number of KPIs because they don’t have a clear view of which measurements are truly indicators of success.
It is no longer enough to be a world-class supplier for our customers. We also need to become a world-class customer for our suppliers. When suppliers work as part of our team, we become poised to take our position as a competitive leader in customer experience.
Customer of Choice: Learning from customer service/buyers
Procurement must deal with many balls in the air. They know that inaccurate sales forecasts may result in stock-outs, lost sales or excess inventory that must be sold at a loss. Simultaneously, they must guard against volatile demand and order spikes, which can cause costs to soar. And all the while, they must strive to be a customer of choice.
Achieving a customer of choice status gives procurement a distinct competitive advantage, particularly when it needs more flexible supplier support. A customer of choice is likely to get more favorable terms, more personalized attention, and greater access to the latest and greatest processes and technologies—which, in turn, help the organization develop new and more innovative products.
Supplier of Choice: Learning from procurement
Likewise, customer service/sales have their share of challenges. To create a positive customer experience, they must constantly ask questions such as: how speedy should deliveries be? What promises should be made about product availability (can we actually keep them)? Too often, these decisions are made in a vacuum without understanding the operational implications or costs involved. Customer service/sales must then endure the wrath of angry customers that might have been allayed had their team gained greater transparency from procurement.
Understanding each other’s perspective is particularly true as we stand at a critical juncture where organizations diversify production to hedge against uncertainty and making smart trade-offs about service levels and speed are gaining greater focus. Now is the time to be better equipped to collaborate and mobilize so we can become both a supplier leader (for our customers) and a customer leader (for our suppliers).
Imagine it this way: procurement is saying, “Here’s a $20 bill. Keep as much candy in the bin as you can”, while customer service is advocating, “There is candy in the bin that’s available on demand. Go ahead—take all you want.” No wonder there is conflict!
To learn more about the strategies of each function side by side download our white paper, "Learning From Opposites: Procurement vs. Customer Service".
