Determine upfront how good a supplier is before signing the contract

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Douglas MacGregor.JPGMost organisations have experienced a supplier who committed to a deadline and then failed to adhere to it or claimed to have certain skills and knowledge in-house, which in the end it could not provide. Douglas MacGregor, MD of supplier service benchmarking company SuppDex tells SmartProcurement that contacting a prospective supplier’s other customers offers a way of assessing service delivery.

During supplier selection phases and contract negotiations a supplier will make service claims that can only be confirmed once a supply relationship has begun, under a contract, which is often too late.

Before signing a contract Procurement must measure the aspects of a prospective supplier’s service that only its other customers have experience of, says MacGregor.

“If a potential supplier treats all its customers well then it will likely treat you well - just the type of supplier you would want on your side,” says MacGregor.

SuppDex2.JPGMacGregor advises seven questions to put to the customers enjoying the services of a prospective supplier:
  1. Did they stick to their promised deadlines? Were they on time? Do you think they took your deadlines seriously? Did they deliver on time, in full, with all the paperwork?
  2. Did they have all the skills and knowledge in-house? Do you think they could improve their skills and knowledge base?
  3. Were warranties and guarantees honoured? Was it easy to claim on the warranties and guarantees?
  4. Were they honest in their dealings with you? Was their integrity sound? Were they honest and upfront on all issues?
  5. Were the products and services of a good overall quality? Did they skimp on quality unnecessarily?
  6. Was the final price paid the quoted price or were there unforeseen additions about which they should have forewarned you?
  7. Would you recommend this supplier to a colleague or a friend?

“The answer to the last question is quite a telling response. You are asking an organisation to put their name behind the service they received. If they’re not happy, they won’t,” says MacGregor.

The question topics cover the majority of Procurement’s concerns about suppliers that cannot be easily assessed up front. The only way to really assess them is to ask a supplier’s customers and that is where SuppDex comes in. We ask the questions that are so difficult to get answers to, he says.

SuppDex interviewed Procurement professionals across all industries to develop the initial list of questions. The emphasis was not to have an exhaustive list, otherwise customers would not respond. The goal was to have less than ten questions covering all areas of Procurement’s interest, but which it cannot find out from a supplier before entering into a contract with them.

Noteworthy is that the first six core issues identified were the same across all industries.

SuppDex1.JPGSuppDex is a supplier survey that creates a benchmark for supplier satisfaction across all industry sectors, assessing how customer-focused a supplier is. However, it is also a competitor analysis, enabling a company to see how well a supplier is performing relative to competitors in its industry.

“You may think that your supplier’s attention to deadlines is terrible and may think of contracting a new supplier. But what if that supplier is actually better than the industry average?”

Putting these questions to existing customers has advantages for procurement:

  • Assess risk on soft issues difficult to evaluate prior to a purchase.
  • Determine whether a potential supplier’s service levels are above or below their industry norm.
  • Overall standardisation of an industry average.
  • Force suppliers to improve their service levels.
  • Allows suppliers to evaluate themselves against their competitors so hopefully over time they will improve their service levels.

For more information on supplier service level benchmarking contact Douglas MacGregor at douglasm@suppdex.com or visit their website at www.suppdex.com

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