Joint planning One of the most tangible building blocks for critical and strategic relationships is the creation of joint business plans. However, results show that this activity has come under pressure in the last 12 months. This has also affected how far the joint planning activity penetrates the critical and strategic supplier population. Overall, the proportion of respondents reaching more than 50% of their strategic and critical suppliers with joint plans has dropped from 29% in 2021 to just 20% in 2022. However, this trend has not been followed by Leaders, where the proportion reporting joint plans with more than 50% of critical and strategic suppliers has increased to over 70%. Customer of choice Establishing and maintaining a customer of choice relationship with as many critical and strategic suppliers would have been a top priority during the disruption and uncertainty of the last two years. Overall, the proportion of respondents that believe they are a customer of choice for more than 50% of their critical and strategic suppliers has reduced significantly, from over 80% in 2021 to just 45% in 2022. For Leaders, the figure has only dropped slightly from 88% to 84%. Customer of choice benefits During a crisis, it is often the less tangible benefits of good supplier management and being a customer of choice that will make the most difference. In particular, customer of choice prioritisation receives first access and preferential delivery of goods and services that have been disrupted. For many companies, the realisation that they are not a customer of choice would only have become evident when expected preferential treatment was not forthcoming.
The distribution of benefits by type has remained relatively constant. However, it should be remembered that this is against a background of fewer companies being able to report that they are a customer of choice. Improved account management is the benefit most often reported by 48% of respondents. This can vary from simply allocating more time and resources to the account to adopting a proactive and partnership-based approach that can yield many benefits. For example, good account management and communication would have been vital during some of the most serious supply chain disruptions that have been experienced. Next is another less tangible but important benefit, commitment, or, as described in the question, the “willingness of the supplier to go the extra mile”. Again, this is reported by almost half the respondents overall but by 66% of Leaders. It’s also clear that customer of choice status can yield direct cost benefits, as demonstrated by the 46% of respondents that report receiving preferential pricing. This year’s research confirms that Leaders still have a clear advantage in the area of customer of choice benefits, being almost twice as likely as Followers to be capturing them.
For what proportion of your critical and strategic suppliers have you created joint business plans?
Openness and transparency We have conducted numerous studies into what makes a customer of choice, and the most important feedback we have received and analysed is from suppliers. They consistently place openness and transparency at the top of the attributes list they are looking for from a customer of choice. One way of creating this is to adopt an open and transparent approach, by looking at the health of the relationship from the perspective of both parties. While, as we’ve seen elsewhere in this study, questionnaires are frequently used to gather information, this is often one way and limited in terms of stakeholder involvement. It also quite often fails to translate into action. This brief analysis reveals that the 360 o approach is only adopted for a small number of suppliers, with the vast majority of respondents (76%) using it for less than 50% of their critical and strategic suppliers. However, in the case of Leaders, it is used more widely with over half using it with more than 50% of their critical and strategic suppliers.
Communication Another customer of choice attribute that suppliers are looking for is good communication and a willingness to share information. Again, we asked suppliers what kind of information they find most useful and gathered feedback on how often this is shared by the companies responding to our research. The top five information types shared with suppliers comprise the customer organisation’s strategy. This will be of particular benefit to those critical and strategic suppliers, who will use it to check and adjust the alignment of their strategy, and is shared by over two- thirds of respondents. Next is more operational, but suppliers often cry out for: future demand and forecast data. Again, this is an area that suppliers consistently prioritise as a required area of improvement. These are followed by performance data, current and future challenges, and company news likely to affect suppliers. Although all this information is useful to suppliers, care and attention must be paid to how and when this information is shared.
For what proportion of your critical and strategic suppliers did you gather 360 o feedback on the relationship’s health? (all respondents)
17% 50% to 75% 5% 75% to 100% 12% 2% Leader
Fast Follower
Follower
50%
23%
13%
11%
Less than 50%
27%
70%
93%
76%
For what proportion of your critical and strategic suppliers do you consider yourself a customer of choice?
Less than 50% 50% to 75% 75% to 100%
50% to 75% 75% to 100% 20% 7% Leader
Fast Follower
Follower
39%
45%
39%
25%
Less than 50% 16%
41%
68%
What information is shared with critical and strategic suppliers? (all respondents)
What kind of customer choice benefits are you receiving? (all respondents)
67% Your company strategy
50% Company news that affects them 51% Your current or future challenges Future demand and forecast data 53% Supplier performance data 55%
46% Preferential pricing
More supplier executive focus and engagement
43%
Preferential access to scarce products, materials or capacity 30% 32% Market insights and intelligence 33% Our supply chain is more resilient 42% Access to the suppliers best people and resources
Suppliers consistently place openness and transparency at the top of the attributes list they are looking for from a customer of choice.
First look at innovation 27% No benefits 9%
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