How many customers are there in a supply chain?

Certainly a lot depends on the complexity and composition of the chain, products, components etc. But just remember that every player may be a customer, at some point throughout the chain.

 

Literally speaking, a supplier is a business that makes its goods or services available to another business or person. Just as a customer is a business or person that agrees to buy those goods or services. Now that we’ve established that, just for a moment let’s park literalism and talk about preconception! We often assume an approach towards others – perhaps cautious, guarded, or noncommittal positions based on our perceptions – typically because of a persons title, role, or because of what we associate with the organisation that they may represent.

 

Stereotypes, preconceptions

 

We all do this in our lives across a range of settings. We essentially take shortcuts in our thought processes to help us react or handle situations appropriately. These are our preconceptions; and those reactions are often based on our learned experiences, personal preferences, stereotypes, or even by absorbing what we’ve seen on the news. This information is logged in our subconscious and called upon when required.

 

This is what’s called an Availability Heuristic, often collectively known as demonstrating Cognitive Bias – sometimes correctly sometimes questionably. Heuristically it typifies a triggered attitude, or a form of conveyed treatment, sometimes undeservedly.

 

Harsh? It’s true. A single throat to choke. Who remembers that charming expression? Certainly not uttered in reference to our customers. And thankfully not heard so much nowadays. A term that was more commonly used though to refer to encouraging supplier performance through accountability and consequence. Covid certainly did a lot to level the playing field.

 

The view upstream does not describe a hierarchy 

 

As procurement and supplier relationship evangelists, we’ve always been passionate about creating the ultimate business relationship experience. We’ve been fortunate to have worked alongside and learned from organisations across many sectors of industry, including financial services, to logistics, communications, defence, SI consultancy, public-sector, and some of today’s most recognised brands.

 

Interestingly in more recent times, the subject of Upstream versus Downstream has become a more frequent discussion point. i.e. Does the term Downstream invoke a sense of priority or ranking? Same thing vis-à-vis Upstream of course. But whilst the term upstream refers to the point of departure, origin, or source; where downstream refers to the point of arrival, delivery, or an end point – this is certainly an area where interpretations, or sensitivities need to be managed carefully.

 

Sometimes this is demonstrated unknowingly. You probably view your upstream supply base as your suppliers – whilst they look down (metaphorically speaking) and see you, the customer. Does that mean that when you turn to your suppliers you subconsciously act a certain way, whilst another way, sometimes entirely, when turning to your customers? That would actually be fairly typical.

 

Cascading bandit terminology

 

Years back whilst advising a FTSE 250 on SRM best practice during a restructure, the then CEO’s candid view was that “all suppliers are bandits”, which of course cascaded down through the SLT and beyond. There’s cognitive bias in action right there!

 

Not the Supplier and not the Customer

 

But here’s the thing; you’ll not be truly able to operate an efficient business model if you don’t engage both up and downstream – facing consistency into both suppliers and customers. The best way to do this? Embrace modern SRM, drive the change. Transition away from managing your suppliers. Instead, focus on optimising relationships with both – based on trust, reciprocity, exploring innovation, shared values, enhanced collaboration, and of course by implementing meaningful business barometers and a range of SMART KPIs.

 

When was the last time you heard anybody refer to managing their customers? Generally we do our best to manage good relationships with our customers – it’s good for business.

 

Yet when we look at the supply base, we tend to think in terms of managing the entity – supplier management, supplier performance, contract management, and contract performance. The overwhelming reason being that when it comes to the supply chain we’ve spent years focusing purely on the numbers. In so doing the lack of backed off alignment between customer and supplier has grown wide! Fair to say in the past that supply chain was invariably viewed as an overhead. And as is the case of overheads, the emphasis will always be on driving down cost.

 

But supply chains have evolved. Customer expectations and requirements have also changed. Standards of service, responsible sourcing, global tracking, price matching, ecommerce, reverse logistics, customer satisfaction, subscription purchasing, loyalty programs. the list goes on.

 

Customer Relationship Management and Supplier Relationship Management are more now than ever, two sides of the same coin. Take a look at these two lists of system benefits.

 

Here are some of the benefits of using a CRM system: 

 

• Better customer service
• Better pipeline forecasting
• Increased sales
• Detailed analytics
• Streamlined communications
• Improved customer retention
• Higher productivity and efficiency
• Managed communications with prospective leads

 

Here are some of the benefits of using an SRM system:

 

• Improved forecasting and decisions
• Improves supplier performance
• Better visibility
• Increased mutual trust
• Reduced risk
• Better communications
• Improved collaboration
• Supports innovation value creation
• Improved loyalty (whether strategic or not)
• Increased customer satisfaction

 

As you can see from the similarities across both CRM and SRM disciplines, the two are very closely linked. Yet supplier relationships have until recently been largely a one way street. It’s time to embrace the [paradigm] shift that is happening in front of our eyes.

 

Afterall, worth noting again, there can in fact be several customers along the supply & value chain. Customer, supplier, and supply chain attitudes are constantly evolving.

 

Find out more. Talk to our team about how Suppeco can help your organisation.