Supplier relationships key to procurement innovation

28 September 2012

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28 September 2012 | Anna Reynolds

Supplier relationships are key to the next phase of innovation in procurement, according to Remko van Hoek, global procurement director at PwC.

Speaking at the eWorld Purchasing & Supply Conference in London yesterday, Hoek said suppliers should be treated like customers, because building a better relationship with them can reduce risk in the supply chain.

He claimed where as the focus used to be on stakeholder management and sourcing, SRM is now a priority and at the forefront of procurement. “Procurement has moved from the left, more cost-centric approach to the right which is relationship and value-driven,” he told the audience.

He warned buyers that if businesses don’t focus on SRM, they will lose credibility with their suppliers and miss out on hiring and developing talented people.

Hoek said a common problem in the supply chain was limited visibility of vendors, particularly in the second and third tiers. He recommended implementing controls to monitor activity and suggested purchasers provide practical support to their suppliers and engage with them by visiting production sites.

Delegates also heard the importance of buyers being open and focusing on selling their company to their supply base. He described the benefits of having a dedicated team in the business, between procurement and supplier, which gives the supplier an independent point of contact. He said this strategy is in place at retailer Wal-Mart where regular feedback is given to suppliers.

Hoek said the challenge for purchasers is how to train and structure procurement teams while aligning them across the business. He identified the questions businesses should be asking themselves: “Is procurement part of the business top team yet? Have we embedded global operations into our organisation? And is procurement treating our suppliers like customers?”

 

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