Be it in life or business, good relationships rely on good communication. It’s a fact that many have come to embrace – except for in supplier relations. Here, there is plenty of room to improve. A new HICX survey found that 98% of suppliers to some of the world’s biggest manufacturers want these businesses to communicate better. 

Read also: Enhancing Supplier Collaboration: A Key to Business Success

The consequence for a manufacturer is less popularity amongst suppliers. So, the quality of their supplier data drops. Then, the corporate agenda takes a tumble. Because, when key items (for example, cyber security and sustainability) rely on poor data, they can’t possibly be expected to succeed. 

Ultimately, what poor supplier communication does, is make manufacturers uncompetitive. It’s time, therefore, for leaders to acknowledge this issue and make it a priority.  

An ever-evolving relationship

Historically, the relationship between manufacturers and suppliers has been about the transaction: raising POs, exchanging goods or services, invoicing and paying. Additionally, the topic of Supplier Relationship Management (SRM) has been around since the early 80s, but in practice, it only applies to the top layer of strategic suppliers. Implementing SRM this way limits its potential. In recent years, the limitations of SRM, and those of a transaction-only focus, have been exposed through turmoil in the macroeconomic landscape. 

Today, factors such as inflation, political instability and climate change are keeping the business landscape utterly uncertain. So now, we need suppliers more than ever. At any given moment, any one supplier – regardless of how trivial – could help or harm a manufacturer’s resilience. Today, manufacturers need all their suppliers.  They need their best work, highest quality stock, most innovative ideas and clearest carbon emission data. And they need this value to flow in steadily.  

This shift in the relationship has introduced the next evolution in how manufacturers and suppliers work together, called Supplier Experience Management. We’re starting to see manufacturers with strong complex supply chains – such as J&J, Lenovo, Unilever and more – considering the experience they offer. Getting this right will make them ‘customers-of-choice’ and help secure all the value suppliers can offer. 

The current predicament 

This strategy only works, however, if manufacturers communicate well with all their suppliers. Many still view the relationship through a ‘transactional’ lens while collaborating only with their top layer of strategic suppliers. But today, this only harms competitiveness. 

The survey revealed that suppliers mentally link the idea of collaboration and communication with their perception of a customer-of-choice. Suppliers were asked an open question: What does ‘customer-of-choice’ mean to you? In almost 40% of responses, the words communication, relationship or partner were used. If nearly all suppliers want better communication from their manufacturing customers, and if good communication is an ingredient for being a customer-of-choice, then it’s possible a good portion of suppliers have yet to grant this status. 

It’s safe to assume then that customer-of-choice status is fair game – if, that is, you’re willing to fix communication issues with suppliers. 

Reversing the cycle

So, how can manufacturers remove this relationship friction? The opportunity is to colour the relationship with a collaborative mindset. This means actively removing any antiquated processes that make work difficult for suppliers. For example, the survey found that as many as a third of suppliers want information to be easier to find. Finding important documents, like sustainability policies and compliance requirements, shouldn’t be laborious. If suppliers are to work more efficiently, therefore, manufacturers must change the systems that are frustrating progress. 

Where the problem comes in is that easing communication friction requires supplier data. As we’ve already established, suppliers struggle to give good data because communication is poor. How then can either element ever improve? The answer lies in understanding that poor supplier communication and poor supplier data are in a vicious cycle. Left to keep turning, the quality of these elements will keep deteriorating. 

The trick to stop – and reverse – the cycle is to avoid fixing either issue in isolation. They’re too interwoven. The way forward, then, is to boost the quality of both supplier communication and data. In practice, this will require closely regarding any Procurement digital transform plans. If these can be built upon a foundation of accurate supplier data and around the goal of removing all relationship friction, then manufacturers will be off to a winning start. 

It’s clear that by addressing communication friction, manufacturers can be stronger. So, considering the uncertain business landscape, let’s stop the vicious cycle. Let’s be active in creating a virtuous cycle. And let’s communicate with suppliers in a way that helps us be truly competitive. 

About the author 

Costas Xyloyiannis is co-founder and CEO of HICX, the leading supplier experience management solution. Costas founded HICX in 2012 to address the challenges of bad supplier data in the enterprise. 

He holds a Master’s degree in Computer Science from Imperial College London and has 20 years’ experience in helping some of the world’s largest companies to take control of their supplier data and deliver a superior supplier experience.

He strongly believes in the importance of data and supplier-centricity, as a foundation for digital transformation in business, and is a regular speaker and contributor on this topic.