Communication
How to Use Supplier Communications to Drive Increased Supplier Innovation
October 6, 2014
Alex Short
3 minutes

Large businesses are investing heavily in training their procurement teams on supplier relationship management, but is it now time to start spending money on better communications to help drive increased supplier innovation?

One of the big buzz words within the procurement world is supplier relationship management (SRM), a capability that enables procurement teams to drive more value from their suppliers by developing more collaborative and trusting relationships. Most investment in SRM goes into the development of new processes and the training of category managers and buyers. However, further investment is needed in both a centralized supplier communications plan and execution. This will help drive supplier innovation programs to new levels, as it shows commitment and continuity from senior executives involved in the initiative.

Below is my five point plan for supplier communications which will help drive an improved supplier innovation program.

1) Publish a summary of your annual report to strategic suppliers. Strategic account managers should already be dissecting customers’ annual reports and quarterly statements. However, in my experience only a minority do.

So why not proactively notify your top suppliers that a new annual report and/or quarterly statement are available. If you can spare the time highlight the sections that are most relevant to the suppliers. The outcome should be a more informed supplier base with an increased understanding of your current business strategy and a deeper knowledge of the business environment in which you act.

Ideally, these communications should be sent by the Chief Procurement Officer (CPO).

2) Communicate your organization’s definition of supplier innovation and innovation strategy. For suppliers to deliver your business innovation, they need to know what innovation specifically means to your organization. This can be achieved by defining and sharing your organization’s characterization of supplier innovation, innovation strategy and workflow. Suppliers can then understand your internal processes and recognize where they fit in.

These communications should always be sent by the CPO and where possible should include a statement from the CEO on the importance of innovation and the significance of the supplier’s contribution.

3) Publicize supplier innovation success stories. With the definition of supplier innovation and innovation strategy communicated, it is now time to share the success stories. Send an email and/or one page PDF document outlining a case study where your business worked with a particular supplier and initiated new innovation. This will do wonders in driving other suppliers to do the same.

Where possible try and spread the case studies across different categories of suppliers and supplier innovation. These success stories should also be linked to your supplier awards. However, be careful not to make the sharing of these innovation case studies an annual event as innovation needs to be seen as an ongoing process. Monthly or bi-monthly case study updates will highlight your company’s commitment to the supplier innovation program and its internal ability to take ideas to execution.
These communications should come from the supplier innovation lead and/or the CPO. Where possible, other senior executives from within your business should comment on how the innovation has aided the business. Suppliers will then better understand their contributions and are recognized and valued beyond the procurement function. This ultimately gives more strength and backbone to your cause.

4) Share your future product roadmap. Where possible share your future roadmap and changes in strategy. As with the annual reports, the more a supplier knows about your future business the more chance they will be able to support and innovate. Where these communications are delivered from will be specific to the case in hand, but you need coordination of the team to ensure continuity.

5) Create a monthly supplier newsletter. As supplier communications become habit, why not try producing a monthly newsletter to your top suppliers. The content of the newsletter should include the following:

Relevant company press releases and articles which contain contributions from your senior executives
Articles related to the business environment that will affect your own organization
Updates on changes of personnel or roles within procurement and other functions which will be relevant to suppliers

The effort to create a supplier communications plan is by no means a small task. However, increased trust and openness shown to your suppliers should in turn result in a considerable increase in supplier innovation.

Check out Walmart’s Approach to Supplier Innovation by click HERE

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Alex Short is Founder of Old St Labs he is passionate about building the next generation of business software. He is recognised as one of procurements thought leaders.
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