Selling your new procurement system to your suppliers
Typically, when an organisation overhauls their existing procurement practices (such as implementing a new system, new processes, etc) they look at all the internal change management issues resulting from the changes and often neglect engaging with their suppliers and getting them on board with the changes. This important step can contribute to the successful adoption of the new practices.
Suppliers have almost as much interest in ensuring the new processes are followed as the company itself, if not only for the benefit of being paid in a timely manner. It will mean they are aware of your purchasing practices and can trade with you accordingly. This will in turn benefit the supplier as they can expect fewer delays and/or follow up inquiries about the purchasing activity and, most importantly, with the timely payment of outstanding invoices.
With payments made on time as a motivating factor, they can train their staff in how to deal with your company and what to expect from your purchasing process, thus significantly increasing the likelihood of compliance from their end and indirectly on your staff that they interact with.
Your advice to your suppliers should be very clear, outline the changes and be very specific about how you expect them to interact with your company; from the way your suppliers are to receive purchase requests from your company, through to how they are to provide any goods delivery or invoice documents.
Where there are new purchase order documents to be used, an example should be provided, highlighting the changes from any previous documents and the key fields to be used throughout the purchase process (eg purchase order number).
Likewise, providing details of how you would like to receive the supplier-issued documents (preferred formats, mail and email addresses, etc) will give the suppliers clear guidance on what they can do to have them processed faster. This, in turn, benefits the supplier with fewer delays and ultimately payment on time.
It will also be worthwhile to include in your notification to suppliers the impact of not satisfying any of these new processes. This may include return of non-compliant documents to the supplier (for re-submission) or delays in payment as a result of your staff having to process invoices manually.
Companies can also reinforce the policy by sending out regular reminders of the company’s trading practices. This will also serve as a reminder of the supplier’s obligations to advise any changes from their end, such as contact details. This should be done half yearly or even quarterly.
Here’s an example from an international iPOS user and how this approach worked for them. When they implemented iPOS and were working through the internal change management issues, they decided to reach out to their suppliers and seek their ‘assistance’ with working through these issues. This client emailed suppliers, outlining very clearly and concisely how they wanted to trade with the suppliers and the benefits to both parties. This was done in part to make the suppliers aware of the best way they could do business with the company but also to use the supplier’s staff to compel the change in the behaviour of their own staff. Not surprisingly, they found the supplier behaviour changed considerably as did their own staff’s behaviour.
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