Value definition. Research Questions. Supplier Relationships: Are we creating Value? 14/03/2012

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1 Supplier Relationships: Are we creating Value? John Cartwright Hugh Lavery UCISA 2012, Celtic Manor 15 th March 2012 Value definition 1. the amount (of money or goods or services) that is considered to be a fair equivalent for something else 2. the quality (positive or negative) that renders something desirable or valuable Research Questions The following questions were posed to a selected group of HEI IT Directors and Supplier representatives; 1. What is your definition of value? 2. What is your definition of Supplier/Customer Relationship? 3. What model(s) of Supplier/Customer relationship do you have at the moment? 4. What is your ideal Supplier/Customer relationship? 5. How would you like your current relationships to develop? 6. What is the biggest issue you face in your Supplier/Customer relationship environment? Sample Group:- 11 HEI s 8 Suppliers 1

2 Value HEI s What is your definition of value? Value Suppliers What is your definition of value? Value Key themes Items of convergence in this area were: - Need for Relationship/Engagement/Trust/Understanding - Solutions - Cost - It varies, according to need and time Divergence was noted in the areas of - Actually having a Relationship/Trust/Engagement - TCO versus just buying - Where is value added? - Flexibility 2

3 Relationships 1. a state involving mutual dealings between people or parties or countries 2. a state of connectedness between people Relationships HEI s A two way Process beyond order-deliver-invoice-pay and into the area of mutually effective partnerships to provide us with value added and cost effective solutions and them with workable profit I really get fed up with the lets divide and conquer approach by some suppliers. implies something 2-way; the supplier can help the customer maximise the value of their investment and build their strategy; the customer can help the supplier gain a better understanding of their business needs and expand their market. a long-term relationship where both parties gain from developing a shared agenda that advances both organisations at a realistic cost we want the relationship to be long based on a mutual desire for us to be term, and we will pay for unexpected bills successful, not based on us pulling the if something unexpected happens. contract out of the draw each time there is an issue. work together to add value, often beyond contractual requirements... open exchange of information, leading to decision making that is good/optimised for both parties... Relationships Suppliers one where both parties work together as if they were one organisation working towards a common strategic goal. try to understand problems and issues from a customers perspective. an on-going and long term conversation listening, understanding, respecting, analysing. Customer relationship should be a 2-way street Multiple levels; from transactional business through to trusted advisor. if a relationship exists we should be the first supplier you call even when you are not sure if we have a solution. Multi-faceted aligned on key goals, strategies and objectives of customer and supplier. something that delivers significantly more value than a series of transactions would over the same period of time where expert competencies are applied to more complex business oriented transformational aspects. open exchange of information, leading to decision making that is good/optimised for both parties... 3

4 Ideal Relationship Models HEIs views What is your ideal Supplier relationship? Ideal Relationship Models Suppliers views What is your ideal Customer relationship? Current Relationship Models Responses from HEI s included; At the moment ad hoc Mixture order-deliver-invoice-pay, with contact only where pain is felt, by either side everything from the Tesco model to having a partnership relationship but it isn t really working that well.. Small number of companies where we are developing a proper partnership We don t have a formalised model We are beginning to spread the message that no one person is responsible for supplier management Varies from purely transactional to confrontational very few that advance both organisations strategic agenda we like to leverage our brand to maximise a belief that they really do not want to screw this one up we put in quite a lot of time visiting some of our suppliers at a strategic level giving them advice All rather ad hoc A range; none needed Supplier Driven Driven by us - Strategic 4

5 Current Relationship Models Responses from Suppliers included; We work typically at 2 levels - Account Management from prospective Client to post Go-Live, - Client Management as their representative within our organisation broad range from purely transactional to trusted partner our goal is to develop the latter. the short answer would be a blended approach. combination of tactical and strategic dependant on the customers level of adoption of our products. About 100 types and that can be a problem. transactional procurements with telesales via OD or Web, to sector Account Managers. We segment our approach.. consultancy and expertise that creates value for clients and our approach of investing some of that resource FOC into strategic relationships married with low cost transactions using telephone based staff and web tools to drive out cost. Biggest Issues in SRM Responses from HEI s included: What is the biggest issue you face in your Supplier relationship environment? Biggest Issues in CRM Responses from Suppliers included: What is the biggest issue you face in your Customer relationship environment? 5

6 Summary A range of relationships exists today and are required The need for change is recognised by both HEI s and Suppliers An acceptance that there is a different way to create more value through better relationships A willingness to change does exist Clear link between quality of relationship and sustainable value creation Key Factor is. People Questions? John Cartwright Hugh Lavery 6

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