We kicked off Vizibl Collaborate 2021, the world’s largest Supplier Collaboration summit, with a fireside chat with Marc Engel. Marc has spent the last 5 years as Chief Supply Chain Officer at Unilever – a long-time leader when it comes to Supplier Collaboration and Innovation (SC&I).
For Engel, a key aim and a benefit of the Unilever Supplier Collaboration program ‘Partner with Purpose’ is becoming what he terms ‘partner of choice’ among key suppliers. Here’s how Unilever did it.
Partner with Purpose: How to Become Customer of Choice
Engel began the fireside chat by noting that ‘buying is the new selling’. He expanded:
‘It’s incredibly important that you realise you’re not buying, but you’re selling the company – to powerful suppliers who have a lot of capability and a lot of choice on where they’re taking their innovation. Essentially you need to realise that when you engage with these suppliers, you should make the most of it.’
Supplier Collaboration is a two-way street. Or as Marc Engel puts it, it’s: ‘all about driving mutual growth with a group of partners around innovation, sustainability, capacity, cost savings.’
To become ‘customer of choice’ you need to sell yourself effectively, positioning your business as an attractive prospect to potential partners. To do just that, Engel suggests a number of changes to your ways of working:
To facilitate a ‘customer of choice’ relationship, Engel suggests that a culture change is needed right where the business interacts with its supplier and partner ecosystem: in the procurement function.
‘You need to go from a mindset, in your procurement department particularly, that because Unilever is big, the suppliers should be happy that they can do business with Unilever, and you need to swap that around completely.’
The idea that ‘they should be grateful to work with us’ is a relic of procurement’s past. Characteristic of an adversarial relationship where procurement exists to hammer suppliers down on price year on year, it isn’t conducive to becoming their customer of choice.
As businesses pivot towards extracting value from their ecosystem through cost optimisation and growth (as opposed to pure savings), this mentality must be replaced by the motto of mutual benefit. You are working with suppliers because they provide your business with vital innovation. Ultimately, this results in you serving your consumer base better:
The first question in any of our teams now is not what does this cost, but what can it deliver for the consumer? What is the unique point that it can give you that basically will make this product or this launch a success in the marketplace?’
Change your mindset
A big sticking point we see at Vizibl when talking to enterprise companies about Supplier Innovation is ‘not invented here’ syndrome, where organisations are suspicious of outside solutions. Prior to Partner to Win, Unilever were one of these organisations:
‘Now we are trusting our suppliers more. Ten or fifteen years ago we probably had the view in R&D that, you know, “we know best”, and we just tell you what to deliver us.’
Successfully establishing Partner to Win and Partner with Purpose required this culture change of embracing novel, external ideas to happen across the business, not just in procurement.
Change your relationships
This change in mindset in procurement and the wider business must be reflected in all interactions with your ecosystem. At Unilever:
‘We build relationships top-to-top. Those relationships allow us to share capabilities and to co-innovate. We have many suppliers where they have implants into our operations and we have implants into their operations.’
While getting alignment at senior level on both supplier and buyer side is important, however, these relationships need to be maintained regardless of seniority:
‘The worst thing you can do is to have a great spiel and a story at the top of the organisation but in the day-to-day suppliers are not feeling it. So consistency of the message, of the behaviour, is incredibly important here.’
And given that Supplier Collaboration is a business program not a procurement program, connections need to be made beyond the buying function, allowing suppliers to build relationships with other vital areas of the business. These relationships should be characterised by openness and reciprocity when it comes to sharing key information:
‘There are also things around being very transparent and very openly sharing business strategy and consumer insights – so you don’t let the important suppliers just talk to the procurement people, but we give them access to our marketeers, our R&D people.’
Change your processes
Friction-filled processes and systems present a barrier to suppliers engaging with you productively. This is especially true in large, complex organisations. Your processes need to facilitate these new, transparent relationships:
‘When you are a large company, you’re not always the easiest to deal with because there are many decision-makers, many processes that are running concurrently.’
In addition to making it easier to navigate onerous org charts or complicated communication channels, you should be looking at your governance processes to avoid smaller suppliers getting what Engel terms ‘lost in the big wheels of a multinational’.
Governance should be proportionate to the size of the supplier, their risk level, and the nature of your working relationship. While policies and compliance shouldn’t be done away with completely, it might be that handing startups – with a small headcount and low resource – hundreds of pages of policies to read and engage with is making it very difficult for them to work with you.
These insights from Engel are great for existing partners, but how does Unilever forge new relationships with smaller, innovative suppliers?
Like many other companies, they initially assumed these suppliers would approach Unilever themselves. Engel admits that isn’t the case: ‘it’s true for the big ones, it’s not true for the small ones’.
So Engel searched for them himself, creating a number of Unilever initiatives in addition to joining existing platforms like Greentown Lab and SME Hub, and attending large trade shows packed with small startups.
He notes that ‘when you approach them and say “have you thought about Unilever?” very often they’d never even thought about it because they have the idea but they don’t have the visibility.’
However it is you scout for these suppliers, Engel counsels putting real energy and proactivity into your search and baking this process into your procurement practice:
‘I think you need to dedicate a certain part of your organisation to basically scouting the marketplace [to match] the needs with the availabilities. That can be digital or that can be physical, but I think in today’s world that is a very core competence because if you just wait for what you’re going to get then I think you will be missing out.’
This M.O. is not unlike today’s sales process; instead of waiting for your customers to come to you, you go out and find them.
Procurement should be adopting the same method when it comes to finding the suppliers that will drive innovation and business growth. After all, buying is the new selling.
Read more of Engel’s insights in Part 1: Partner With Purpose – The Business Case.
To watch our chat with Marc Engel, head over to Collaborate 2021 On Demand.