How to conduct a supplier review: a case study

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FrancisChurchill_100.jpgBy Francis Churchill

In 2017, Vitality, a UK health insurance firm, decided to do a 360-degree review of its supply chain. The firm, part of Discovery Limited, had recently restructured and rebranded, and wanted to have a clear idea of what its relationships with suppliers were like.

Sourcing and supplier managers Duncan Campbell-Marsh, Frances Cooke and Chris Wilson sent out surveys throughout the organisation as well as to its suppliers, asking about activity between Vitality and its suppliers. "The whole point of it is that they have to be honest, otherwise we are not going to achieve anything from carrying out the survey", says Campbell-Marsh.

This honest survey did reveal an issue. Two suppliers (both providers of physiotherapy services) were not being paid properly. Claims were being hindered by the systems in place, with some unpaid invoices dating back two years. This was putting a block on the suppliers' ability to meet their service objectives.

Vitality decided to pull together a project team, including invoice specialists and several members from each of the teams involved, to work through the debt on a weekly basis until it was settled.

"That was the honesty that was needed", says Wilson. "The positive thing is that it is now a case of everyone turning around and saying, 'this can never happen again'". It is also unlikely to happen again because, as a result of the action taken after the 360, Vitality now has the systems in place to ensure supplier invoices always go through.

StanleyDaschund_300.jpgThe team also conducted a supplier segmentation exercise to establish its priority categories. Clinical was important on the health insurance side of the business, as were Marketing and Information Technology (IT). "Marketing is important because of the expense of putting Stanley out there on billboards and the Tube", Wilson says, referring to the brand's now iconic sausage dog.

IT has been growing in importance as Vitality moves its user experience away from telephone calls towards digital and online. "As much as we can process automatically, we try and do. IT has a huge role to play in that because of the migration of insurance claim systems that we have done over the past couple of years", notes Wilson. Vitality has consolidated three separate IT platforms into one in the last few years.

Keeping suppliers on your side is important to Vitality. "You want to be that best client", says Cooke. "You want them to be a partner. You want them to work with you, you want them to understand your business intrinsically so that they are thinking for you." That is one of the reasons the firm started to hold its own supplier awards.

"We demand a lot from our suppliers as we constantly ask them to innovate. So, if they can know a lot more about what we are trying to do and our aims and objectives, then that gives them the guidance to be able to go and innovate", says Cooke.

"At the end of the day", says Campbell-Marsh, "no one knows more about their marketplace than suppliers when it comes to insight, trends or best practice. When suppliers decide to share that expertise, hopefully we will be on the top of that list".

They came, they saw, they supported the event
Two years ago, Vitality launched a supplier awards ceremony as an opportunity to celebrate the successes of suppliers and also to share with them the aims and objectives of the business. What started as a zero-budget affair has now grown into being hosted in a London hotel with speakers from the business including the Deputy CEO. "[The first year] we ran it by ourselves with support from our Director, Mike Saunders", explains Wilson. "Then we managed to get our Chief Executive, Neville Koopowitz, and our Vitality Programme Director, Nick Read, involved. They came onboard, saw what a great ceremony it was and decided to back it financially and they have given us their support."

Supply Management

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