Why Communication & Supplier Engagement Need Renewed Focus
Table of Contents
Voice of the Supplier Survey 2024
Effective communication is the backbone of any successful supply chain management strategy. As businesses strive to strengthen their supplier relationships, understanding the suppliers’ perspective is key to making meaningful improvements in this area.
And there remains a lot of work to be done here. Our 2024 Voice of the Supplier survey reveals some critical insight: almost half of the suppliers surveyed (48%) feel that their most important customer could significantly enhance communication efforts. Almost all suppliers (98%) agree that some improvement is needed.
This article dives into the emerging importance of supplier marketing as a route to addressing the issues raised, the benefits of targeted communications, and how segmentation can revolutionize supplier engagement.
In this article, we cover:
- Top 6 things buyers can do to improve supplier relationships
- What is the emerging field of supplier marketing?
- Why supplier marketing matters
Top 6 things buyers can do to improve supplier relationships
It’s clear that communication is an increasingly persistent source of frustration for suppliers. When suppliers were asked about the top three things that their most important customer could do to improve their relationship, communication-related issues were at the forefront. Here are the improvements that suppliers said need the most attention:
- Make information easy to find (such as sustainability policies and compliance info) – 33%
- Provide better service and support (such as help desks and self-service options) – 31%
- Simplify business processes – 26%
- Offer a single digital platform for all their needs – 26%
- Set more reasonable expectations – 26%
- Improve communication across all departments – 25%
On the flip side, paying invoices on time was the least of their concerns, indicating satisfaction with transactional aspects, but underlining these areas for improvement required in communication, service, and support.
Bad communication leaves a bad impression
Poor communication can hurt other parts of the relationship. For example, 58% of suppliers feel their main customer is only interested in getting the lowest price. Nearly half (46%) said that their main customer can be difficult to work with, 48% struggle to resolve queries, and 47% feel their progress is hindered by their most important customer.
These issues seem to be more about technology than people, since 92% of suppliers agree that the people they work with are helpful and cooperative.
Enhancing supplier engagement
Segmenting suppliers can help ensure that they get the right information and level of communication from the company. Different types of information are relevant to different suppliers based on factors such as supplier type, category, and region. This is where the emerging field of supplier marketing comes in.
What is Supplier Marketing
To understand supplier marketing, let’s start with a definition of marketing from Philip Kotler, widely known as the father of modern marketing. Kotler defines marketing as, “The process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from customers in return.”
Applying this to suppliers, we can define supplier marketing as, “The process by which companies engage suppliers, build strong supplier relationships, and create supplier value in order to capture value from suppliers in return.”
Anthony Payne, CMO at HICX, explains, “Supplier marketing is about being the customer-of-choice by making it easy and pleasant for suppliers to do business with you.” Essentially, it’s about engaging suppliers, building strong relationships, and creating mutual value.
Why Supplier Marketing Matters
Just as in consumer marketing, where personalized content and experiences are the norm, the same approach can benefit supplier relationships as well. With digital tools, suppliers can access portals in their language, view relevant compliance information, and receive important updates easily. This personalized approach can significantly enhance the supplier experience and improve efficiency.
For example, the content needs of strategic suppliers differ from those of tail spend suppliers. Using segmentation, content can be better tailored to meet these needs. A news update about innovation for tail spend suppliers might focus on payment process improvements, while for strategic suppliers, it might highlight new product introductions, for example.
Supplier marketing is set to yield many mutual benefits. By adopting a supplier marketing segmentation approach, companies can:
- Launch initiatives based on different supplier segments
- Customize workflows
- Tailor experiences for all suppliers
Ultimately, it’s up to the company to invest in supplier marketing to gain value, manage risks, and drive innovation through these improvements.
Elevating Supplier Relationships Through Effective Communication
In conclusion, our analysis in this survey of supplier engagement highlights the paramount importance of communication and why this needs to move up the priority list. Suppliers have voiced their need for improved communication channels and targeted interactions with their customers. By embracing supplier marketing principles and leveraging segmentation strategies, businesses can address these needs more effectively.
Enhancing communication not only fosters stronger relationships but also drives efficiencies throughout the supply chain. It empowers suppliers to navigate complexities with ease, fosters innovation, and ultimately contributes to mutual success. As businesses continue to evolve in the dynamic landscape of supply chain management, prioritizing effective communication with suppliers will remain a cornerstone of success, and become a point of significant differentiation.
By heeding the suppliers’ perspective and investing in robust communication practices, companies can unlock new opportunities for growth, collaboration, and innovation in the ever-evolving world of supply chain management.
