Why are Supplier Frustrations Expected in Procurement?
The relationship between buyer and supplier is like a never-ending game, with both parties combating for what they each think they deserve in the end.
The suppliers are irritated about buyers giving short notice on orders and overly negotiating for more profitable deals. The buyer complains about the supplier failing to deliver orders on time or providing an inferior product. Needless to say: Each side is constantly at each other’s necks, which is not helping anyone.
So, who is in the right? What can be done to address these everyday supplier frustrations in procurement?
Below are some typical supplier frustrations in procurement — first from the supply side, then the buyer side, and finally, some thoughts on how to enhance interactions between the two.
Common Frustrations: Supply Side
- Unclear RFx Requests
Suppliers often face difficulties when dealing with RFx requests that are, at best, vague and, at worst, nearly indecipherable. Suppliers are not mind readers, so it becomes a point of conflict when buyers issue challenging and time-consuming requests to fill.
Unclear RFx requests from buyers may include many scenarios. For example, buyers ask for incomplete information without having a template or response guideline. Buyers forget to mention any prequalification criteria vendors are expected to meet (financial parameters, certifications, etc.). Or even buyers using surveys that are just not simple to fill out.
Because suppliers often get asked to fill out so many requests and surveys, they don’t. Neither side gets what they need.
It seems like a simple solution in procurement: why not just call and talk it out? The reality is that most suppliers and vendors don’t have time. Procurement is needed to ease the RFx process for suppliers.
- Communication (or Lack Thereof) from the Buyer Side
Again, suppliers are not mind readers. Buyers need to communicate precisely what the expectations for product delivery are. Lack of communication from buyers leaves suppliers playing guessing games and ultimately not accomplishing anything given the short time.
Whether no one is around to answer the supplier’s question in the process or the buyers are too busy to relay their expectations clearly and understandably, the result is the same: frustration and, sometimes, even failure.
- Payment Cycles
Every day, you hear stories from suppliers trying to deal with long payment cycles that leave them high and dry in terms of cash flow. The heart of the issue is that, naturally, everyone wants to sustain their cash a little longer and get compensated rapidly.
Payment cycles are experiencing longer and longer delays, but the finance process is getting too complex. These long payment cycles leave suppliers facing pressure as they scramble to stay afloat between pay dates. Too many different accounts with varying pay dates can be a lot to chase down.
A standard tactic suppliers adopt to address exceptionally long payment cycles is discounting. The supplier negotiates a price discount in exchange for faster payment from the buyer. Although this means suppliers are cutting some of their profit margins, there is something to be said about prompt and reliable payment. Some may even call it priceless.
- Onboarding Is Complicated
It is no secret that onboarding a new supplier can be complicated and inefficient. Onboarding usually brings many players/parties, variables, and moving parts. Onboarding with inefficiency naturally leads to numerous delays and max frustration.
Common Frustrations: Buyer Side
- Inaccurate Lead Time and Shortages
Providers rely greatly on factory direct and authorized distributors to fulfill orders and meet business demands to maintain their operations efficiently. When lead time variability hinders supply chain management, it can cause long lead times, decreasing distributors’ productivity.
These factors severely impact KPIs and performance if authorized distributors cannot fulfill and process their buyer’s requests and deliver the needed components in time.
Lead time variability problems can provoke inventory shortages and unfinished manufacturing processes, propelling you to either uncover a more dedicated parts supplier or complete a one-time order with someone else.
- Inaccurate Shipments
Unfortunately, imprecise shipments are a continuing issue for buyers. Far past lost stock and diminished margins, inaccurate shipments can have a consequential and devastating impact on buyers’ brand reputations. Numerous SKUs and unfamiliar package sizes can sometimes be the culprit, but also negligence on the vendor side.
Whether suppliers sent the incorrect items or quantity, things didn’t arrive on time, or any other type of shipping confusion that could go wrong, incorrect shipping remains a thorn in many buyers today.
- Poor Quality
One thing is true: If the quality of the product you are providing to your client (supplied by your vendor) is not flat out not good, your reputation will take a hit. Your reputation is your brand. It is no surprise that buyers’ frustrations quickly build up when confronted with poor quality from suppliers. This is where knowing — and trusting — your chosen vendors is paramount to avoiding this common pitfall.