Supplier Relationship Case Study
Public Sector Client
The Challenge
The Client wanted to review the relationship with their top 30 suppliers (defined by value of spend). The overall objective was to identify how easy it was to do business with the Client – specifically identify the processes and methods of operating that impeded and restricted suppliers offering the Client best value for money.
Stenmoore were tasked to:
- identify potential efficiency savings and produce a practical plan to realise them within a reasonable timescale
- review the Clients current administrative procedures and suggest practical and effective methods for streamlining
- define what partnering means and developing a model for use across the supplier base
- advise on how changing practices will facilitate cashable savings in commodity purchasing and develop a defined ‘partnering’ arrangement with the Clients major suppliers
- produce a ‘tool kit’ to allow this work to be replicated across all suppliers
The Client believed that using Stenmoore would ensure suppliers confidentiality and enable them to feel confident in giving honest answers without potentially jeopardizing any existing relationship with the Client.
Stenmoore Role
In conjunction with the Clients Strategic Procurement Department we developed a standard questionnaire which was used as a structure for the interviews we held with all identified suppliers.
We then interviewed all suppliers to establish the issues. Present from the Clients organisation were:
- Managers responsible for the work winning activity – sales, marketing and estimating (those responsible for preparing and submitting tenders).
- Managers responsible for operational delivery of the products or services.
- Resources responsible for administering the business – account management, finance and accounts payable.
Stenmoore managed the entire process and provided all resource to undertake the interviews.
The Delivery
Stenmoore delivered a structured report that identified methods, processes and working practices of the Clients that prevented the suppliers delivering an effective value for money solution. We developed a tool kit and methodology for the Client to utilise during a change programme to improve the relationships.
In addition the information gathered allowed the Client to:
- identify and rationalise where appropriate, multiple contracts
- better understand and manage risks in contracts and mitigate where possible
- build flexibility into both contracts and organisational response to change
- build credibility with suppliers and thus develop true gain share partnerships
- allow continuous reviews with all suppliers using an equitable and agreed method
We were also able to identify savings in both cash and efficiencies of approximately £150,000 - £200,000 annually by operating in partnership with the top 30 suppliers. This figure could be enhanced by an ongoing programme of review across the top 100 suppliers.