How about supplier satisfaction?

Supplier satisfaction is a foreign term.  Mentioning it alone is enough to cause confusion, strange looks on faces, and instigate a tendency to change the subject altogether.  After all, it is all about Customer Satisfaction, right?

Supplier satisfaction must go hand in hand with customer satisfaction. Suppliers are partners in the project and have a stake in its success just like the customer, if not more.  A customer buys a certain type of product or service maybe once in a while.  But a suppliers’ bread and butter is the repetitive successful delivery of the product / service through projects.  This is why a supplier needs the project success more than the customer; as a reference to get more work from other customers.

What customers need to consider is that good suppliers are fast learners.  They know how to be selective in choosing customers just as customers are selective in choosing suppliers.  When a supplier works for a customer that is known to be fair and professional, chances are that they are more attracted to get that business than from a customer who has a questionable reputation.  This might not be so apparent to many, the fact that suppliers are selective about who they work with.  But it is a reality.  Even though it looks like even customers with not-so-great reputation end up finding willing suppliers to work with them, but in reality this comes at a very hefty price.  First of all, suppliers with enough work on their plates will probably avoid unprofessional customers, or build a hefty margin in their pricing to mitigate risk coming from working with an unfair customer.  Second, there are always new suppliers coming in to the market or line of business who are desperate to get any work and be willing to take a chance with a not-so-attractive customer.  Also, suppliers with bad reputation themselves might have no other alternative but to go with these unwanted customers.  Finally, suppliers who themselves are unfair and unprofessional would not mind getting into the ball game with their counterparts from the customer side.  They are willing to “fight it out” later with the customer but all they care about is securing the deal.

The above scenarios are gloomy, but they are probably the only scenarios out there for a customer who refuses to partner with suppliers and treat them on fair-basis.  And accordingly they are the only choices for suppliers who choose the unprofessional and unfair route.  Whether a customer or a supplier, this is not an area one wants to be in.

This is why many professional standards focus on the importance of partnering between suppliers and customers and on building win-win relationships, based on fairness and professional conduct.  For example, the Project Management Body of Knowledge (PMBOK) focuses on fair basis negotiation and win-win conduct between “buyers” and “sellers,” which are the terms used by the Project Management Institute (PMI) for customers and suppliers respectively.  The PMI Code of Professional conduct focuses also on the values underlying healthy professional relationships.

The customer – supplier relationship is not something that should be left for the projects managers to deal with.  Policies at the organizational level must be put in place to ensure a healthy relationship and to ensure the organization learns from its procurement experience and improves upon its practices.  Unfortunately many organizations let few bad experiences with unprofessional suppliers lead to mistrust with any supplier they work with.  Instead of this protecting the company, it actually backfires, and even attracts unprofessional suppliers and paves the way for unprofessional conduct from suppliers.  Instead of companies becoming less trusting, they should go into their procurement practices and question the root causes that resulted in bad experiences with suppliers, which usually stem from causes starting long before the supplier is contracted, or from unfair practices by the customer themselves.

Every customer should consider the following 5 questions when determining how to deal with their suppliers.

1) Suppliers unsatisfied: how would they feel about working with a customer in the future? Will their dissatisfaction from a previous encounter lead them to increase or decrease their margins?

2) When suppliers label a company as difficult to work with, how does that affect their decision to work for the company? If they do decide to work for that company, how would they mark up their price?

3) When a customer is too judgmental and critical of a supplier, focusing on fault rather than partnership to get maximum value, will the supplier try to maximize value for customer? Or just finish the work as fast as possible to get out from the toxic relationship?

4) When a company focuses on getting the lowest price as the key factor for supplier selection, how does that affect the type of suppliers the company attracts and how that consequently affects project success?

5) When a company focuses on getting the lowest conforming bid, how does that affect the level of creative problem solving that the supplier will offer when putting together their proposal? Will they be willing to share new and  better ways? Or will they just provide the minimum so as to ensure winning the work?

On the bright side, many customers get the best out of their suppliers.  And they do not get it through forcing or win-lose techniques, but through best practices of fairness, partnership, and professionalism.  Others who are not so lucky blame it on the lack of professional suppliers out there.  professional suppliers are out there.  But they can only provide maximum value when the right environment is provided by both supplier and customer.

Customer-Supplier relationships are partnerships, so neither side can achieve success alone.

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