In my previous experience working for large national distributors, we often found that when it came time for our annual supplier meetings, we did not have adequate feedback on our supplier relationships — either from our own associates or from the suppliers themselves.
We asked ourselves the typical questions: “What were last year’s sales numbers? What are our returns? What is our disputed invoices percentage? What are our inventory levels? What’s our T&E ratios?” We went through all manner of operational issues, but we didn’t have meaningful feedback from the field to verify those stats. As a result, the meetings could be very anecdotal.
We had no data when it came to voice of the associate. What were the suppliers’ relationships with our people in the field and where were there gaps we could identify?
We instituted a 360-degree survey to identify those gaps and create a much more robust supplier meeting. The goal was to put us in a better negotiation position with the supplier. It also allowed us to aggregate issues and categorize wins from one sales region that might be translated into action in other regions.
The 360-degree survey we developed for proper business planning consisted of asking a range of similar questions to three separate parties. The end result was a triangle consisting of voice of associate (employee), voice of supplier and voice of customer.
As the most important component, voice of customer sits atop the triangle, but we will save the customer perspective for its own separate discussion — it’s that important.
Voice of Associate
To capture the voice of associate, we would ask questions in seven categories, finding tremendous value in each:
- product quality,
- outside sales,
- inside sales,
- price competitive,
- sales partnership
- and operational excellence.
For example, under expediting, we would ask the associate to rate the supplier’s ability to expedite items and handle changes. (Contact me for more specific question examples in each category.)
Expediting and operational excellence questions reveal how responsive the supplier is to changes and how well they perform at getting product to you as a distributor. A supplier who excels in these categories is someone you want to do more business with, as those relationships done right will take cost out of your operations.
The outside sales, inside sales, price competitiveness and sales partnership question categories let a distributor know if this supplier can help you to grow your business. For example, do they have the sales support to help you find opportunities and grow your business on an account-by-account basis?
The product quality questions reveal if the supplier has the right products, at the right quality, to be a top-tier supplier at the end-customer level. A supplier could excel in operations or on sales support, but if they don’t have that product quality or the market share at the end customer level, it doesn’t really help you as the distributor.
An important caveat: To do this right, the responses must be anonymous for all sides. You have to let responders know their direct feedback won’t be used to punish either side. Otherwise, you’ll get insincere and inaccurate answers. The only way to make it work is to be truly anonymous.
Voice of Supplier
For the supplier, ask similar reflective questions to the ones you pose to your own associates. Have them rate your inside sales people — how knowledgeable are they about the supplier’s product? Have them rate your outside sales team — how much of their line do you carry? What sales partnership opportunities are your to bringing to their sales team?
On operational excellence, the supplier can rate you in areas such as use of EDI (electronic data interchange), or use of automated quoting tools versus time-consuming custom jobs.
Once you have answers from both the associate and supplier perspectives, present them side by side and look for big gaps. For example, if your team says the supplier does a poor job of expediting items and handling changes and the supplier rates your team as poorly managing customer changes, that’s a huge gap. Improving it will save operational costs for both businesses, allowing you to become better partners.
A note on price: Distributors never think price can be low enough, while manufacturers rarely think a distributor properly sells their value. Therefore, there’s always going to be a huge gap in price competitiveness. Even so, by scoring all of your suppliers, you can always identify which ones have the biggest gaps and possibly discover there is in fact a bigger underlying problem with that relationship.
Next time, I’ll dive into the third piece of the 360-degree survey triangle: customer-driven metrics. In all of the numbers a distributor typically looks at, you don’t often have any voice of customer data reflected. You sell a certain number of units to a customer a certain number of times throughout the year, but what did those transactions mean for the customer experience? And more importantly, how can you improve it?
Gunderson is vice president of analytics and e-business at MDM. He has held senior distribution leadership roles in analytics, marketing, e-business, category management, pricing and sales over a 20-year career across multiple distribution product sectors. Reach him at [email protected].