Light-Years Behind: Supplier Leadership Vs People Leadership

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Let’s face it, we’re light years behind in how we source and manage suppliers. At least in comparison to how we select and lead our staff.

As procurement leaders, our primary concern is on our staff. Staff work our businesses, meet KPIs and protect the bottom line. Hey but so do our suppliers! Why is it that we have little concern about our procurement efforts when up to three quarters in every dollar is reserved for our external suppliers?

Where to start you ask?

In fact, we’d argue that the same strategies work across managing people and managing suppliers. At the end of the day, we often buy complex services that are heavily dependent on the skills, motivation and environment that the service provider’s staff find on the ground.

This means we can learn to better source and manage our suppliers if we treat them like our employees!

Lead your suppliers like your staff. Rewarding good behaviour, ensuring that both parties have their interests covered, even simple things like paying on time are all sure ways to better exercise how to better manage your staff.

Above is a representation of gauged performance improvement, with companies that reign greater leadership over their suppliers, versus those who do not lead their suppliers. Companies that do lead suppliers yield greater performance improvements.

This is a result of operating in a modern economy, where we mainly produce and buy services, not goods. Making suppliers’ staff, not machines or production lines, the key to success.

The formula to achieving this high performance is not simple management, but leadership. Specifically, this means that successful procurement teams have found ways to:

  1. Understand the supplier’s strengths and build on them: Understand where weaknesses lie, avoid or mitigate, and build on strengths to increase performance.
  2. Seek the supplier’s input and experience when solving business problems: The chances are your suppliers have seen it all, seek their advice and input into problems your business might be facing.
  3. Express confidence that goals will be achieved: Positivity and optimism are far better motivators for staff and suppliers, than negativity and cynicism.
  4. Punishment does not lift performance: Written, contractual punishments do not lift the performance of suppliers, it simply places mindsets at a bare minimum standard. Inclusion of benefits for exceptional performance will see an increase in responsiveness and motivate suppliers.

If you want to ensure that you are getting the best performance from your suppliers, you must ensure that you lead them the same way you’d lead your staff. Motivate, incentivise, be positive and consult with your suppliers to better manage expectations and increase performance.

Download Grosvenor’s new guide Managing Suppliers Like Staff – A game-changing guide to supplier performance management here. 

About Author

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Dr Stefan Gassner is a driven procurement leader with ten years’ experience in supply chain, procurement and commercial management, including internationally. Leading Grosvenor’s Procurement Practice, Stefan loves delivering tangible results and has worked for more then 70 of the biggest organisation in Australia to transform their procurement functions, deliver high stakes sourcing projects and implement performance management processes. During his PhD, Stefan developed a framework to support the decision as to what services should be kept inhouse and which ones are best outsourced, which has been published as a book in Germany. A visible expert, Stefan is regularly engaged to present at procurement conferences and seminars and regularly contributes to thought leadership pieces. Stefan loves a challenge and clients value his communication skills, stakeholder engagement and evidence-based approach to consulting.

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