Insight Call: Becoming a customer of choice

Being a customer of choice underpins the success of any SEI strategy. Without a willingness from suppliers to contribute knowledge and intellectual capital, procurement will lack the fuel needed to power SEI.

It’s for this reason that Peter Naegelein, Director of Business Development and Scouting at Osram, notes during our Insight Call on the subject that “everyone wants to be a customer of choice.” Having this status opens up new possibilities to a buying organization, allowing them to tap into innovative capability in the supply base and beyond.

During this Call, Naegelein takes SEIC members through Osram’s strategy for becoming a customer of choice. A recent survey Osram rolled out to suppliers, events they have held to encourage supplier engagement, and internal changes to help facilitate customer of choice are all covered.

The full call can be listened to below.

Key takeaways from the call include:

Customer of choice surveys can be hugely effective

• Osram split its supplier survey into two sections – ‘implementation’ and ‘cooperation’ – within which there were five questions relating to Osram’s performance;
• Before using the information collected, an external statistician was hired to confirm the results were robust;
• With a 50% response rate, Osram gained valuable insights from its supply base, which has since been fed into how procurement is structured to work with suppliers;
• Interestingly, the region of the supplier played a major role in response. Suppliers from Asia, for example, were far more prone to giving positive feedback.

Tech or innovation days can be used to improve customer of choice

• Osram’s recent “TecDay” had a format where existing and new suppliers could pitch their ideas;
• Suppliers have a need to spread their ideas beyond regular communication channels, Naegelein says. Inviting suppliers to an event like the TecDay has therefore added to Osram’s standing as customer of choice;
• In addition, Osram’s “tandem” approach to the event, where procurement and R&D interacted with suppliers together, was appreciated by suppliers.

Culture in procurement needs to change

• If procurement is still driven by cost savings, why should staff take time considering supplier innovation proposals? Naegelein says it’s a valid question – but it’s one that must be answered to advance customer of choice;
• To change this culture in procurement, Osram introduced KPIs on supplier idea proposals, with various procurement staff judged on the number of supplier proposals they process.

Turn customer of choice progress into a metric

• Osram sees its supplier survey and the impact it has on customer of choice as a future metric;
• Later this year, Osram will send out the survey again and compare data to see the extent to which relations with suppliers has improved.