The procurement world is riddled with headaches, many of which stem from awful supplier relationships. What are the most common supplier frustrations in procurement today? Let’s look at perspectives from both the buyer and supplier sides.
The supplier and buyer relationship is critical in procurement and sourcing, but common problems plague this rapport — issues as old as supply and demand.
To put it bluntly, the relationship between buyer and supplier can feel like a never-ending — and exhausting — game of tug-of-war, with both sides battling it out to "win" what they feel they deserve in the end. There’s also constant turnover. Hunting down your new contact on the supply side is a familiar game of Where’s Waldo. And when you find them, you have to start all over.
The cause of the squabbling and drama ranges. On the supplier’s side there’s displeasure about buyers giving short notice on orders and buyers strong-arming for better deals. The buyer gripes about the supplier failing to deliver orders on time or providing a subpar quality product. Suffice to say: Each side is wagging its finger at the other, which doesn't do the procurement cycle any favors.
So, who is in the right, and what can be done to address these common supplier frustrations in procurement? As the saying goes, "There are two sides to every story," so it’s always worth listening to — or trying to understand — both perspectives of any given situation.
Gathered below are some common supplier frustrations in procurement — first from the supply side, followed by the buy side, and some ideas on how to improve interactions between the two.
Trying to keep a buyer happy can seem like mission impossible for many suppliers at the end of the day. From unrealistic expectations to far-too-short turnaround times for product, lack of proper communication from buyers, vague requests, and many more sources of contention. Dealing with buyers that keep pushing boundaries can leave suppliers feeling frustrated, discouraged, and at a loss with how to improve a strained relationship based on perceived subpar performance that they often feel is beyond their control.
Let's take a closer look at these and other common supplier frustrations from the perspective of the supply side and explore some ideas on how best to address each of them.
Suppliers face a predicament when dealing with RFx requests that are, at best, vague and, at worst, nearly indecipherable. Suppliers are not mind readers — nor should they have to be — so when buyers issue requests that take forever to fill it becomes a point of contention.
Examples of unclear RFx requests from buyers that bring out the worst in suppliers include things like asking for vague information without including a template and/or guidelines for responses, failing to mention any prequalification criteria vendors are expected to meet (think financial parameters, certifications, etc. ), and using surveys that are simply not simple to fill out. The list goes on, but you get the idea here.
Because suppliers are asked to fill out so many requests and surveys, they often just don’t. Neither side gets what they need.
To procurement it seems like a simple solution: why don’t they just call me and talk it through? The reality is most suppliers and vendors don’t have time. Procurement needs to make the RFx process easy for suppliers.
Suppliers are not mind readers (nor do they have time to be). Buyers need to communicate (clearly) what the expectations for product delivery are. A lack of communication from buyers leaves suppliers with their hands tied.
Whether it be that no one is around to answer questions suppliers may have in the process or that the buyers are too busy to convey their expectations in a clear and understandable manner, the end result is the same: frustration, frustration, frustration — and sometimes, even failure.
Every day, you hear from suppliers trying to cope with long payment cycles that leave them in the lurch in terms of cash flow. The crux of the issue is that, understandably, everyone wants to hold onto their cash longer and get paid quicker.
Payment cycles are being stretched longer and longer, but the finance process, in general, is getting too complicated. This leaves suppliers feeling like their backs are against the wall, constantly scrambling to stay afloat between pay dates. 30 days here, 90 days there, 60 days there… it’s a lot of chase down.
In order to address exceptionally long payment cycles, a common tactic suppliers adopt is discounting. A price discount is negotiated in exchange for faster payment from the buyer. Although this means suppliers are shaving some of their profit margins, there is something to be said about prompt and reliable payment. Some may even call it priceless.
It is no secret that onboarding a new supplier can be inefficient and frustrating. Much of this frustration stems from the fact that onboarding usually comprises many players and an abundance of moving parts, which, by nature, means numerous delays and — you guessed it — max frustration.
An article from Tipalti addresses this common onboarding conundrum faced by suppliers in-depth, and offers some helpful ways to navigate it.
Now, from the buyer side, the tasks involved in supplier and supply chain management can be riddled with challenges, leading to big headaches. Let's explore some of the common supplier relationship frustrations from the buyer side.
Providers rely heavily on factory direct and authorized distributors fulfilling orders and meeting business demands to maintain the efficiency of their operations. When lead time variability begins causing issues for supply chain management, it can lead to long lead times and reduced productivity for distributors,
The impact these factors have on KPIs and performance are severe if authorized distributors are unable to process their buyer's requests and deliver the needed components in time.
Lead time variability issues can inventory shortages and incomplete manufacturing processes, forcing you to either find a more reliable parts supplier or complete a one-time order with someone else.
Unfortunately, inaccurate shipments are an ongoing issue for buyers. Far beyond lost stock and reduced margins, inaccurate shipments can have a significant and devastating impact on buyers' brand reputations as well. Multiple SKUs and strange package sizes can sometimes be the culprit, but also carelessness on the vendor side.
Whether the wrong items or quantity were sent, items didn't arrive on time, or any other type of shipping snafus that could — and do — go wrong, inaccurate shipping remains a thorn in the side of many buyers today.
Let's face it: If the product you are providing to your client (supplied by your vendor) is not up to par, your reputation will suffer. Your reputation is your brand. Period. Knowing this, it is no surprise that buyers’ frustration can quickly build when faced with poor quality from suppliers. This is where knowing — and trusting — your chosen vendors is paramount to avoiding this common pitfall.
Can you imagine a world where the buyer and the supplier are both committed to each other's success? The headaches of dealing with suppliers can get better — for both sides.
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