Keeping up with the Pace of Change
We are living in a world of constant change. We feel it in our lives and at work. In fact, an Inc.com article from Oct 2019 states, “According to research from HR consulting firm Mercer, 73% of business leaders expect significant disruption in their industries over the next three years. Only 26% felt that way last year.” With the significant amount of change in processes, organizational expectations, and digital transformation occurring and expected in the coming years, sometimes it feels hard to keep pace within the four walls of our own companies. It, in fact, feels like we are being forced to eat the whole pie at once versus having a selection of just the amount of change we want.
As our worlds are swirling through change, take a moment to reflect on what it must be like to be a supplier. From working with thousands of suppliers over the past decade, they are also going through their own changes to combat competition, to increase market share, and to keep pace with all the changes occurring within Procurement and within their client base. And, as you might expect, some suppliers are very talented at eating the whole change pie at once, while others struggle. They struggle to influence and lead change within their own organizations, and they even lose focus on their customers just to get through what is going on internally.
As Procurement leaders, we have a responsibility to ensure our suppliers are keeping pace to be able to support your needs well into the future. Luckily, more and more Procurement organizations are focusing on this need to support their suppliers through change. In fact, HPP has recently supported two Procurement organizations that are looking for rapid growth within their businesses. They both came to us seeking support in preparing their suppliers for the growth. While being in a high growth business is wonderful, it also comes with inherent risks of supply instability, lack of capacity, and underperformance of suppliers to new expectations. Even if an organization is not in high growth mode, having proper strategies to prepare suppliers for whatever change is occurring is critically important for the overall stability of supply chains and for the success of the change initiative.
When faced with change, here are some tips to help your key suppliers keep the pace.
Have high expectations of your suppliers and hold them accountable to them
As companies continually evolve, so do the expectations of what good or even great looks like. When is the last time we have been told that performance was great last year, so we have reduced expectations for this year? It never happens! Also, just as you would with your own teams, having high expectations of your suppliers drives growth, innovation, and passion for the relationship. It is when you have low expectations that suppliers will deliver minimum results to their contract and operate in a transactional based relationship. Clearly communicating the new, higher expectations is a great place to start. However, it will take more than that to ensure suppliers meet those expectations. Alongside those expectations, should be Key Performance Indicators (KPIs) focused on the new expectations, and constant communication of the performance against those KPIs.
Ensure there is open and transparent communication
We have often heard from suppliers that they had no idea that their clients were facing such large-scale changes in their business, or they knew of the changes, but had no idea how it impacts them. Or, the best one, we received a bunch of memos from our client on their latest changes, but we do not understand, and no one has contacted us since. These suppliers are lost sheep who are now underperforming or not offering their best, because they are not aligned to the pace of change occurring with their clients. For key suppliers to keep pace with your change and actually change themselves, they need to have the opportunity for two-way communication. They need to hear what is changing, why it is important to their client, and why it is important to them. Typically, we have found that in person conversations with suppliers often work the best to kick off a change, followed up with ongoing conversations on the topic. Also, these conversations must include gathering questions, feedback, and concerns from the suppliers.
Ask Suppliers to Problem Solve
One of the best ways to ensure suppliers are keeping pace with change is to ask them to help solve a problem. For instance, one of our high growth clients had a problem with too many low performing suppliers. These suppliers all had constant issues with quality and delivery timeliness. Instead of just talking about the high growth and the changes occurring in the company because of that, they focused on seeking the suppliers to solve the problem of poor performance. The suppliers now clearly understand that they need to perform better so they are prepared for the increased growth. Problem solving can take numerous forms from increasing innovation to submitting invoices differently, to solving a gap in requirements. Whatever it is, asking the suppliers to help you achieve the change through solving a specific problem will ensure they are engaged and ready for change.
As the expectations of Procurement professionals continue to shift and change to focusing on value creation, preparing suppliers for change and helping them keep pace will become more and more prevalent. If done correctly, not only can suppliers keep pace, but they can help deliver on the changes that are being requested.
If you want to learn more about helping your suppliers keep up with the pace of change, join us at #PLAPC.
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