40
When the benefits being reported from the buy side are analysed, a few stand out as being more prevalent for leaders. These include suppliers that are much more willing to invest , and far more likely to get first refusal on innovations .
■ LEADER ■ FOLLOWER
Figure 1.13. Customer of choice benefits
OTHER NONE GENERAL INCREASED COMMITMENT ('GOING THE EXTRA MILE') IMPROVED ACCESS TO MARKET INTELLIGENCE INCREASED WILLINGNESS TO ACCEPT AND MANAGE RISK INCREASED WILLINGNESS TO INVEST SENIOR MANAGEMENT COMMITMENT / SUPPORT IMPROVED ACCOUNT MANAGEMENT PRIORITY ACCESS TO THE BEST PEOPLE AND RESOURCES FIRST REFUSAL ON INNOVATIONS PROACTIVE IDEAS FOR CONTINUOUS IMPROVEMENT PRIORITY ACCESS TO SCARCE MATERIALS AND / OR MANUFACTURING CAPACITY PREFERENTIAL PRICING
OTHER NONE GENERAL INCREASED COMMITMENT ('GOING THE EXTRA MILE') IMPROVED ACCESS TO MARKET INTELLIGENCE INCREASED WILLINGNESS TO ACCEPT AND MANAGE RISK INCREASED WILLINGNESS TO INVEST SENIOR MANAGEMENT COMMITMENT / SUPPORT IMPROVED ACCOUNT MANAGEMENT PRIORITY ACCESS TO THE BEST PEOPLE AND RESOURCES FIRST REFUSAL ON INNOVATIONS PROACTIVE IDEAS FOR CONTINUOUS IMPROVEMENT PRIORITY ACCESS TO SCARCE MATERIALS AND / OR MANUFACTURING CAPACITY PREFERENTIAL PRICING
2
2
1
1
0% 10% 20% 30% 40% 50% 60% 70% 80%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Opportunity Customer of choice opportunity is more than simply mitigating the risks previously mentioned. It can lead to improved service, innovation, access to the best talent, executive focus and improved competitive edge. Many organisations assume they are a customer of choice purely on the basis of spend and a sense of how strategically important they might be to the supplier.
It’s not easy to draw conclusions from this analysis other than to say that customer of choice benefits are real. Also, that a strategy developed after consul- tation with suppliers via a voice of the supplier type survey would enable organisations to share their expectations, and make it clear what is valued in the relationship and what would constitute genuine customer of choice benefits. Customer of choice represents both risk and oppor- tunity, and both need to be understood in order to create the compelling case to change the way supplier relationships are perceived. Risk Customer of choice risk is only likely to manifest itself when things go wrong. When materials, capacity or resource are in short supply is when suppliers will begin to preference customers. While spend and strategic importance will clearly be factors in this process, so too will other attributes of the relationship. Another manifestation of risk will be the more ‘creeping’ degradation of service levels, responsiveness, account management, etc.
Do they really know? Have they ever asked?
Call Mel Shutes, Head of SRM at State of Flux, on +44 (0)207 842 0600 or email him at mel.shutes@stateofflux.co.uk for more information on conducting voice of the supplier research.
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