What procurement leaders are missing big time?

During my interactions with procurement leaders across various sectors, I often find them addressing the need of efficient operations, focus on quality, cost savings, and even the impact of digitization and evolving role of technology, however, very few leaders touch upon more critical aspects such as sustainability.

This is quite surprising for me as sustainability is something, we cannot ignore at all today. Even if a few leaders understand this clearly, they tend to lose on an important factor i.e. supplier relationships. For most organizations, suppliers and vendors are the ones who are paid for products or services. But isn’t there more to it?

Maintaining a positive supplier relationship is key to sustainability and value creation in the long term. No organization can work without suppliers and vendors. Some may have a critical role and some may not be that significant. But in the end, you need to deal with suppliers, so why not to treat them as an integral part of your business.

In fact, if you refer to the ISO 20400:2017, it provides guidance to organizations, independent of their activity or size, on integrating sustainability within procurement. It is intended for stakeholders involved in, or impacted by, procurement decisions and processes and so procurement needs to be strategically aligned with organizational purpose and the various stakeholders associated with the delivery. That essentially covers suppliers and all the vendors, agencies and consultants who have a role in enabling a business deliver.

So, if you are on board with this thought of developing and maintaining positive supplier relationships, then here are some points which you should take care of:

·      Promote balanced relationships with procurement executives and suppliers. Keep the terms and conditions transparent, and never manipulate any points to take an undue advantage. Develop win-win situations.

·      Treat them with due respect and keep them updated about the matters that impact their association with the company.

·      Assure a fair financial treatment of the suppliers. That includes ordering and payments.

·      Provide feedback, not just negative but positive as well. Most times, procurement teams never provide positive feedback to their suppliers, but jump the gun the moment there is a slight error. This behavior may not work in the long run and the supplier may discontinue as soon as they find a better client.

Remember that it is going to be reciprocal. A healthy relationship with suppliers will not only help you in maintaining a sustained flow of transactions but also in growing the business through many different ways. 

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