“Purchasing has always been finally responsible for quality, cost, and delivery, but with some of the global challenges we’ve had in the last five years, purchasing has mutated into supply chain, and we have taken over a lot of those responsibilities.” – Stephen Tonks, Chief Supply Chain Officer, Fujikura Automotive Europe
Procurement relationship building has usually meant building and managing healthy, transparent partnerships with internal and external stakeholders like suppliers, company leadership, or leaders of internal business units and functions. Over the decades, procurement has developed a particular set of skills, best practices, and tactics for leveraging these relationships to create value for the business and align with top-line goals.
As the nature of purchasing and supply chain has evolved and procurement’s value proposition has expanded across the business, from strategy and revenue to innovation or product development, one traditionally-ignored stakeholder is becoming an increasingly important resource: the end consumer.
I recently spoke with Stephen Tonks, Chief Supply Chain Officer at Fujikura Automotive Europe, about the evolution of purchasing and the supply chain, including procurement’s growing need to take responsibility for and provide transparency multiple tiers into the supply chain.
Listen to the Conversation
According to Stephen, leveraging direct contact with the customer is now a key part of gaining deeper insight into how to optimize a company’s supply chain. In many ways, this is a new role for procurement that will require a new set of skills and approach, but, he says, developing customer relationships shouldn’t be an afterthought for procurement – it’s now a business imperative.
“Over the last three years, I have talked more to the end customer than in the last thirty years combined,” said Stephen. “It’s now a necessity, rather than a wish.”
The question is how procurement should develop relationships with end-customers in an environment where this hasn’t been the norm.
Start with Internal Alignment
Before procurement reaches out to customers, they have to align internally around a communications strategy, says Stephen. “You need to be aligned with the sales department around what you’re going to say and how you’re going to say it. That’s critical.”
Procurement should also be prepared to answer any questions from the customer to make sure that their responses are in line with the business and that their overall approach doesn’t conflict with or violate any part of the organization’s communications strategy or brand.
Getting buy-in to start the outreach could be a challenge if the organizational structure hasn’t allowed for these types of interactions in the past. Communicating the benefits of this relationship is key. As Stephen says, account managers often don’t have the bandwidth to extract all the insight the business needs to optimize the supply chain or inform the customer.
“I don’t think the amount of information that the customer requires can be funneled through one key account manager; they might not be able to handle the amount of communication and the amount of different topics.”
That’s where procurement steps in.
Promote the Benefits of Customer Relationships
Communicating the benefits of traditional purchasing roles and developing one-on-one relationships with end customers is key to getting buy-in for the outreach and support for leveraging those insights to improve the supply chain.
If talking directly with customers is a new initiative for the business, procurement can point out the benefits of investing in this style of relationship management:
- Improved product and service quality: By understanding the customer’s needs and concerns, procurement can work with suppliers to develop products or services that deliver better outcomes.
- Reduced costs: Procurement can use information from customers to negotiate better prices with suppliers or to identify opportunities to reduce waste and inefficiency in their own supply chains.
- Increased innovation: By talking to customers, procurement can learn about new technologies and trends that can be used to improve their supply chains. They can also learn about new products and services that the customer is interested in, and they can pass that information along and work with suppliers to develop these offerings.
- Improved customer satisfaction: By talking to customers and understanding their needs, procurement can develop supply chains that are more responsive to the customer’s specific needs, leading to improved customer satisfaction and better outcomes for the business as a whole.
Develop a New Communications Skill Set
Engaging with end customers requires a different skill set from traditional procurement roles, including the ability to understand customer concerns and build trust through transparent communication. Making a shift toward direct consumer interactions broadens procurement’s skill set, and requires them to ask the right questions to gain a deeper understanding of the customer’s unique needs, pain points, and perspectives.
Then, procurement has to translate those insights back to the business, whether that’s via sales or product or engineering or down the supply chain and leverage that customer feedback to optimize sourcing and production.
Trust Leads to Insight
Procurement should also approach these conversations with the same level of expectation around trust and relationship building they look for with other key stakeholders.
“It helps to build the relationship, to build trust with the customer, because they can see that we understand their topics,” said Stephen. “They can see we have similar topics and how we’re dealing with that, and that our strategy really reflects the same concerns they have.”
Building strong customer relationships requires procurement to:
- Be transparent about their goals and objectives
- Be intentional about which customers they approach
- Engage in active listening while being prepared to answer questions or share information about your own supply chain or the company
Having candid conversations directly with customers can be a powerful tool for procurement and an ongoing source of insight into their concerns and needs.
Delivering Value Through Relationships
“For me, the supply chain always was, and always will be, a people business,” said Stephen. The last few years have seen a profound transformation for procurement, and direct customer engagement has become an integral part of a supply chain strategy. By opening up these new communication pathways and building relationships with the end customer, procurement can gain a deeper understanding of their needs and leverage those insights to improve the supply chain, reduce costs, and increase innovation for the business.
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