March 30, 2017
SPG Meeting Recap: Supplier Rules of Engagement
So, why is it important to have rules of engagement with suppliers? As we discussed at last week’s meeting, having rules in place enables you to maintain leverage, have control of the situation, protect confidential information, set clear expectations, and save time and money. A special thanks to our co-facilitators Nick Fuhry, IT Sourcing Manager at SUPERVALU, and Ann Marsh, IT Manager at Medtronic, for facilitating a conversation on Supplier Rules of Engagement and allowing us to dive deeper into the topic and helping the group understand why rules are so important.
Principles of Leverage Management
It was mentioned during the conversation that it is crucial to maintain leverage when communicating and working with suppliers. Having leverage will make it easier for you to be in control during interactions and therefore have more negotiation power. Below are a few key principles of leverage management:
- Treat every conversation with a supplier as a negotiation
- Set a formal agenda and adhere to the timeline
- Establish internal spending models
- Deliver consistent messages to suppliers – it is important that everyone internally delivers the same message, there must be a consistency in the answers you give suppliers
- Create a leverage plan for key agreements
- Understand viable “Plan B” options – always be two steps ahead, don’t be in reaction mode
- Understand likely supplier actions
- Suppliers will seek out information from any number of sources within your company
Areas of Concerns
During the meeting, several different concerns were shared which showed the importance of having rules established. Below are few concerns:
- Unescorted suppliers in authorized areas
- Confidential information shared with suppliers
- IT solution selection policy not being followed
- Uninvited conversations can negatively impact a project
When explaining the importance of supplier rules of engagement to others within your organization, should explain the rules, and possible consequences of not following them, in a way that others can relate to or explain them in a way that impacts them. This will make them more likely to understand and jump on board.
If your organization decides to establish supplier rules of engagement, it is critical to communicate and educate others internally. If individuals understand the rules they will be more likely to follow and implement them. Remember, communicating the value of supplier rules and why they are important, is the best way to be successful!
What do you think would be good rules of engagement for your organization? What are some times where having communicated solid rules of engagement would have helped you?