Supplier Opinion Surveys 3: A component of supplier relationship management
In this, our third and final article in our series on Supplier Opinion Surveys, we present examples of the deliverables of supplier opinion surveys, discuss the objectives of these surveys, as well as supplier satisfaction dimensions within the context of supplier relationship management.
"Organisations are increasingly realising the impact that suppliers have on their organisation and that total service quality not only applies to servicing the customer but also to the supplier as an integral part of the total value chain", Andrew Hillman, Managing Director of Bespoke Sourcing Solutions, told SmartProcurement.
Managing supplier satisfaction levels is thus essential to the future success of an organisation, which implies that supplier perceptions regarding organisational image, relationship building and processes are understood.
To evaluate and understand the condition of an organisation’s relationship with its suppliers, their needs and the degree of success achieved in integrating suppliers into the total customer satisfaction philosophy, a supplier opinion survey should be employed as a pre-eminent management tool.
The concept of supplier satisfaction
Through the use of supplier opinion surveys, various levels of supplier satisfaction are evaluated. These include:
- Overall satisfaction over a period of time;
- Key drivers of satisfaction, including sourcing suppliers, strategic alliances, relationship management, ordering, receiving and payment; and
- Operational activities in relation to each satisfaction driver.
The model below graphically illustrates the concept of supplier satisfaction on which supplier opinion surveys are developed:
The above supplier satisfaction model enables insight into both the strategic and the organisational level of supplier relationships, and therefore allows for optimisation in the following areas:
- Resource allocation;
- Strategic initiatives;
- Ownership of action plans and improvement initiatives; and
- Maximising long-term revenue and profit through efficiency, supplier satisfaction and supplier relationship management.
Supplier opinion surveys as a management tool
"A supplier opinion survey is a management tool used to improve and further develop internal and external processes with suppliers and partners in the supply chain network. Survey results are inputs to the organisation’s strategic planning as well as its every day operations and behaviour. It is important for an organisation to measure those activities in which it has recently invested, or areas in which performance is poor", Hillman said.
The following diagram shows how supplier opinion surveys can be positioned
"A survey as a management tool is practical, flexible and easy to modify in order to obtain answers to urgent issues. Depending on the questionnaire (general or themed), each survey could be pitched to the needed measures. It is, however, recommended that general questionnaires are kept unchanged to allow for the identification of specific trends", Hillman continued.
Objectives of supplier opinion surveys
The primary objective of supplier opinion surveys is to understand the nature of the supplier’s relationship with the organisation, the needs of the supplier and the degree to which the organisation provides the necessary information and assistance to integrate the supplier into the total satisfaction philosophy.
The following are some of the key objectives in conducting supplier opinion surveys:
- Establish key drivers of world-class supplier relationships and the enhancement of long-term positioning with suppliers;
- Determine those issues which the organisation needs to improve on and manage to allow suppliers to perform their task according to the required standards;
- Utilise supplier feedback to improve operational efficiencies in order to reduce costs;
- Determine supplier perception with regards to the organisation’s policies and procedures, e.g. BBBEE, payment terms, etc.;
- Compare to other best customers; and
- Establish a platform for future benchmarking.
Deliverables of supplier opinion surveys
Once the response deadline has passed the answers to the survey are collated, analysed and interpreted. The figure below illustrates a typical results analysis process:
The results of the supplier opinion survey should be presented in the form of a written report and include fact based numbers, graphics and narratives.
Below are some graphic examples of the collated results to typical supplier opinion survey questions:
Defining supplier satisfaction dimensions
In conclusion, it can be stated that supplier dimensions described in a supplier opinion survey reflect and measure supplier satisfaction. The answers to ‘Agree’ and ‘Disagree’ statements reflect whether the organisation thinks and works towards the supplier’s desired state. A comparison of the organisation to its competitors provides insight into how the suppliers perceive the organisation in terms of respect and service. Opportunities to provide comments allow the supplier to highlight issues, no matter how big or small, which ultimately reflects on the organisation as a whole.
The figure below compares typical supplier dimensions to supplier satisfaction elements:
Supplier opinion surveys offer unique value in that the results help influence a smooth and efficient supply chain, without consequences. Both hard and soft based supplier satisfaction dimensions need to be determined and performed on a satisfactory level determined by the organisation. When conducting supplier opinion surveys all the dimensions should be measured against the business and process environment by the organisation.
The figure below illustrates a theoretical framework for supplier satisfaction:
"Organisations that manage supplier relationships and solicit feedback from suppliers clearly benefit in efficiencies, cost savings and status. A supplier opinion survey should address business, process and communication related aspects and should aim to measure the quality of the relationship between the supplier and the organisation, in terms of how the supplier views the organisation. Basically, the purpose of the survey is to measure how your organisation is performing through external eyes", Hillman concluded.
To find out more about Supplier Opinion Surveys, contact the author of this article, Andrew Hillman of Bespoke Sourcing Solutions at mobile: +27 82 858 1850, or e-mail: email@example.com