The 8 Modules, 31 Focus Points and 5 Collaboration Phases of the SEIC Methodology provide a path to success

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Insight calls are available to join for all members of the SEIC and will be addressing a number of topics

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The 11 modules of the SEI methodology focus on the key processes that enable the successful rollout of SEI

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In-depth explorations of the approaches and techniques used by leading organizations in the field of SEI today

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Thought leadership and insightful articles on the most important issues for companies pursuing an SEI agenda

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Useful downloads, from unique research to practical templates, frameworks and tools being used by SEI leaders

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Adopting different metrics for supplier collaboration

The measures of success in supplier collaborations are altogether different to traditional buyer-supplier relationships. To adapt, procurement must implement new metrics systems

Supplier-collaboraiton

During a panel session on supplier collaboration at the 2017 World Procurement Congress, one of the first audience questions posed to the participants was what kind of KPIs they use to track success.

 

Sitting in the audience at the time, the question didn’t surprise me. Effectively tracking the success of supplier collaboration is one of the most common challenges we come across in the Supplier-Enabled Innovation Center.

 

Quite simply, mature supplier collaboration doesn’t lend itself well to the kinds of metrics we’ve grown accustomed to in procurement. Where in traditional circumstances the performance of a supplier relationship can be gauged by deliverables such as price paid, time to market and quality, the goal posts for success shift when a relationship becomes truly collaborative.

 

Paula Martinez, VP & CPO at pharmaceutical company UCB – an SEIC member – explained how her company used to be very traditional in how it evaluated suppliers based on value provided, but had to change tack with its strategic suppliers to foster collaboration.

 

This change in tack came in the form of a Net Promoter Score (NPS) system. “We’ve now introduced an NPS with our strategic suppliers,” she said. “With it, we measure a limited number of relationships in two ways. They rate us as a procurement organization and customer, and we rate them as a supplier.”

 

The results have had a major impact on how UCB approaches supplier collaboration, Martinez said. “We found some gaps in how suppliers and stakeholders were perceiving these relationships, and gained some fantastic insights.”

 

Martinez’s answer resonates with some of what we’ve heard in the SEIC. Net Promotor Scores have been touted as an effective tool by several members of the community. Husqvarna, for example, recently explained how they use NPS surveys to assess how they are rated as a customer of choice.

 

The principle behind these NPS surveys is simple. Those with a stake in the collaboration – heads of procurement, and other functions if relevant; and their counterparts in the supplier organization – answer questions on whether the collaboration is having a positive or negative impact.

 

This type of NPS can be embedded early on, ensuring that both parties complete it on, for instance, an annual basis. This would provide insights into how productive the relationship is, and can inform decisions on whether it’s deemed successful, in need of improvement, or should be altogether stopped.

 

An NPS, of course, is only one example of adapting measurement techniques to assess the success of supplier collaborations. At the SEIC, we’ve also explored other approaches, including the output of ideas, the amount of ideas that are actually implemented, and the number of innovation projects completed. All are valid and worthwhile.

 

But NPS surveys stand out in their simplicity. Other metrics may be difficult to accurately gauge, or require a certain level of maturity. An NPS can be baked into a supplier collaboration irrespective of maturity, and is almost certain to yield some actionable outputs.

 

As a starting point, then, an NPS is a strong option for a metrics system tailor-made for supplier collaboration. As relationships mature, other methods can also be introduced, up until the point that the buying organization gains a comprehensive view of how the collaboration provides value.

 

Samuel Wrest

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