CASESTUDY
AIB’s suppliers also see AIB in different ways depending on where they are in the world. In Ireland, it is a pillar bank that commands a significant portion of the market. It is very influential, exercising considerable buying power and leverage, but it is a different story when dealing with suppliers that operate on a global basis. LAYINGTHEGROUNDWORK FOR INNOVATION “With consistent management of supplier relationships, AIB is hoping to utilise its position in the home market to extract innovation from global providers” , says Thomas. “One of the benefits of being so big in a relatively small market is it is quite self-contained. We can be early adopters for suppliers, where we can measure the impact, while at the same time suppliers have the opportunity to trial new products and services in a contained manner,” he says. “The extent to which the bank can extract innovation from these suppliers will be predicated by how they view AIB as a client. The stronger the relationship and the easier we are to do business with, the more likely the bank is to be offered innovative solutions and services." “Innovation can become mechanical, as if it’s something the supplier has to tick off a list, whereas if you have a good relationship with that supplier, they innovate because they want to, which means you get a lot more out of it. Most global suppliers are looking for an area to pilot and trial new ideas. If you make life easier for them, guess who comes first? They know you will try new things, work with them and offer feedback.”
What began as a project to make compliance with banking regulation easier to manage, is now growing into a system for extracting more innovation from the supply base. There’s no doubt that strategic sourcing professionals with an interest in SRMwill be watching AIB’s progress with interest.
“There was an element of reluctance to change how we conducted our reporting, but when it was explained that it is consistent across the business and goes directly to board level, it was accepted. Where possible, we also tried to adapt processes that already existed, pulling them together in a consistent manner,” says Thomas. DEFININGTHE SUPPLIERRELATIONSHIP AIB will decide what kind of relationship it should have with a particular supplier and will apply that relationship in the same way throughout the organisation… “otherwise, it could get fragmented with some people thinking we are strategic partners with a supplier, while others see it as a transactional relationship. It is about speaking with one voice, being consistent when dealing with suppliers, to ensure they do not get mixed messages when dealing with us,” Thomas says. With the benefit of hindsight, the strategic sourcing team learned that communication and training, detailing the new approach to SRM, could have included more people and been set in place earlier. Thomas explains: “We had working groups and we had steering committees, but we could have been broader in our approach. SRMmeans lots of different things to different people. Sometimes it is focused only on the performance of a particular supplier: it is uni-directional, but you need to understand your importance to them and how they look at you.”
Innovation can become mechanical, as if it’s something the supplier has to tick off a list, whereas if you have a good relationship with that supplier, they innovate because they want to, which means you get a lot more out of it. Most global suppliers are looking for an area to pilot and trial new ideas. If you make life easier for them, guess who comes first? They know you will try new things, work with them and offer feedback.” Philip Thomas Group chief procurement officer
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