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Customer Centric Procurement

Marketing and Business Development have been talking about it for a while, Research and Development are incorporating it in all aspects, Human Resource is asking if this is the new frontier and finance is witnessing company budgets adjust to incorporate it…It being Customer Centricity. Simply put, it is putting your customer at the center of your business decisions.

Thanks to the internet, the customer is now very well informed about the back ends of any business. Businesses that used the “lack of knowledge” to their advantage can no longer survive in this “information at your fingertips” age. This is where customer centricity stems from. If you build your business around providing the best experience to your star player – the customer, you can expect to do more business.

Now, many may disagree as there are several schools of thought on the matter, but any management professional who does not consider it without reason may be walking down a dark road.

“But what about Procurement?!”

It’s true that the major stakeholders for procurement are internal management and external suppliers. It’s also true that procurement priorities lie in cost savings, risk management, supplier adoption and relationship, spend under management, compliance, the list goes on… Customer centricity rarely shows up on this list. Though top performing procurement teams are now working towards developing a customer-centric approach to their daily operations. Many are reaping benefits from it too.

“But does it really make sense for Procurement to be “Customer-Centric”?”

Let’s take an example – Phone Covers. The market is constantly coming up with new product designs and new materials for phone covers. The customer in this space may not necessarily know exactly what they want in a phone cover, but due to the fast-changing nature of this market, a supplier will be quickly adding new technology, materials, and designs to his or her arsenal. Goods reach suppliers before they reach the market and an early alarm from the supplier can trigger a new range and help a business keep up with a fad because at that time, the customer wants that experience.

Consider another instance – Research and Development is working on developing a new soap for their business. As they run pilot studies on the product, procurement is not in the room. A change or addition to the raw materials of the soap (as R&D tweaks it to customer alignment) takes place. The procurement team is not informed about this and it leads to an extended time to launch because the current supplier cannot provide the raw materials. To find a new supplier that is compliant in a short span of time can not only be hard and uncontrollable but can also leave a business in the darkness.

“How can customer centricity keep the lights on?”

The concept of customer centricity doesn’t require some new and cutting-edge technology to make it successful. There are basic thought shifts and management practices that a procurement team can adapt to be customer-centric. Some of these may include –

  1. Develop strong supplier relationships
  2. Collaborate with all departments and studies working with customers
  3. Understand the customer, stay knowledgeable on the trends and pain points
  4. Use technology that helps you get the best from suppliers and make faster decisions

The process of becoming customer-centric can be slow and long, but this is true for any “thought-shift” a team may try to incorporate. A customer-centric mindset helps build trust and appreciation in the minds of the customer. Not to mention the benefits that reflect on the balance sheet.

Do check out our whitepaper “Customer-centric Procurement – Correlating Customer Experience to World Class Performance” to learn more about this topic.

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