The importance of supplier experience in procurement cannot be overstated. With the increasing complexity of supply chains and the frequency of disruptive events, organizations are heavily reliant on their suppliers. This dependency significantly influences several procurement areas:
- Costs: Procurement expenses often account for 60% to 70% of a company’s total costs. Enhanced supplier management can secure better deals and reduce these costs.
- Quality: Suppliers play a crucial role in maintaining product quality, directly impacting a company’s reputation.
- Shortages and Delays: Dependability on suppliers for timely delivery and adequate materials is critical to avoid operational challenges.
– Sustainability: Suppliers’ sustainability practices significantly affect a company’s environmental and social impact. - Technology: Suppliers often provide essential technologies that are difficult to replace, making their innovation and reliability crucial for a company’s market position.
The Shift from SRM to SXM
Recognizing the importance of robust supplier relationships, procurement professionals are moving from traditional Supplier Relationship Management (SRM) to Supplier Experience Management (SXM). While SRM focuses on optimizing costs and supply chain efficiency, SXM aims to improve all aspects of the supplier experience, including proactive communication, collaborative problem-solving, and building trust and loyalty.
Becoming a Customer-of-Choice
To fully leverage SXM and reap the benefits of a robust supplier network, companies must strive to become a ‘Customer-of-Choice.’ This status, achieved when suppliers prioritize your company due to the mutual value and strategic advantages you offer, requires a shift in mindset. Suppliers should be viewed as an extension of the organization, leading to an agile procurement function with stronger internal and external links.
The Role of Digital Transformation in Enhancing Supplier Experience
Digital transformation plays a pivotal role in enhancing the supplier experience. New technologies not only free workers from manual tasks but also enable them to focus on the supplier experience. Modern solutions provide procurement professionals with the necessary tools to foster meaningful relationships with suppliers.
In focusing on supplier experience is not just about procurement efficiency. It’s about quality, sustainability, risk mitigation, and technological innovation. It’s multifaceted and complex, but when done right, it can lead to your company earning the title of ‘Customer-of-Choice.’
