Ethics - Supplier and Customer Relationships

Before Supply Chain Management became the action statement we were Purchasing Professionals with concerns for our employer. Those concerns included the "Seven Rights" which included; quantity, quality, price, time, source, service, and place. Our success was often measured on how well we met the expectations of our organization within these seven action items. When I had to fill an open Purchasing position I always asked the applicant, "How do you identify who your customers are?" The question seems simple enough but often the applicants either did not know why I was concerned with the customer or they only saw the end-user as the customer. From my point of view, this question is more relevant today than at any other time because as a Supply Management Professional we are now concerned with the whole picture and not just the purchase of goods or services, or materials management, or logistics, or any other single component. I started my career in distribution and as a result, I learned early on that the relationship we have with our customers and understanding their needs and expectations is paramount to what makes us and our organization successful.

So when I ask that question, "How do you identify who your customers are?" - My expectation is that you will say that there are three areas that are customers. They are internal to the organization, our suppliers, and the end users/customers. Since our organization is functioning to meet our customer's needs and expectations, then we need to understand those needs and expectation and how they impact the other departments that are also trying to do the same. So a customer to the Supply Management Professional is anyone that we provide a service.

It is fairly easy to see end-users as customers. Many do not define or think about their fellow staff members as customers because they work alongside them. However, our goal should be to meet their requirements, thus allowing them to meet the needs of the organization's customers. As a result, we are providing a service to them and they are our customers. The last part of this trio is the supplier. So why are suppliers customers? First, let's look at the terms vendor and supplier. Many Supply Management Professionals use the terms interchangeably. However, there is a difference. A vendor is someone that is used once or infrequently, you do not include them in design, and it is a probably a low value purchase. On the other hand, a supplier is an organization that you will have an on-going relationship with for a product or service or equipment. Officially or unofficially a supplier occupies a certain status within a purchaser's company (i.e. preferred, certified, etc.) and depending on the level they attain you may share confidential information, they may be on your design team, etc. Now that I have made the distinction, does that mean you treat them differently? The answer is no. Many argue that suppliers are not in the customer category. But we provide them with the opportunity to expand their knowledge and business. They often share information with us that assists us in our decision-making processes. We interact and recommend ways that make our relationship easier or in other terms help each other improve efficiencies. As a result we are providing something to them that has value because they may not make a sale but the exchange may help them in other ways. As an example, your organization may evaluate a sample of there stock merchandise (i.e. nitrile gloves). If their product does not perform and you provide them feedback, you have provided them real world use experience that they may not have been able to do in their test facility.

How do you enhance these relationships? The best way is with common courtesy. Common courtesy should be employed whether you are dealing with a vendor, a supplier, a customer, or internal staff. There are several components to common courtesy.

1. A Supply Management Professional should always strive to create a positive environment when dealing with anyone that can be considered a customer.
   
2. Treat everyone as you would want to be treated: "The Golden Rule." We will come back to this a little later.
   
3. Be prompt. This includes answering the telephone when it rings, returning voicemail and e-mails promptly, be on time for appointments, etc. Prompt communication will create an atmosphere of understanding and cooperation.
   
4. Have established and published procedures that are followed by all impacted by them.
   
5. In decision-making be fair and impartial showing no favoritism in any actions.
   
6. Create an atmosphere that emphasizes the elimination of misunderstandings and conflicts.
   
7. Maintain confidentiality at all times.
   
8. Be open and honest by providing guidance and supervision based on both the letter of the law as well as the spirit of the law for both legal as well as ethical practices.

Let's go back to the "Golden Rule." This rule basically states to give to someone else what you would like to receive. This may not be what they want to receive at all. You may be content to receive your order at a restaurant anywhere between thirty to sixty minutes. This may not be what another customer wants. So there is the "Platinum Rule" which is to meet the other person's expectation. Since each customer has different expectations, the challenge is to learn what they are and make every effort to accomplish that goal. The last Rule is the "Double Platinum Rule" which basically means to exceed what the customer expects. For instance, your company may offer another product that enhances the one being purchased by your customer but they do not know about it. By offering and explaining to them you may exceed their expectations. There is an excellent article written by Bryan K. Williams for Hotel OnLine in June 2007 called, "Three Service Rules: The Golden Rule, Platinum Rule, and Double Platinum Rule." This should always be our goal - to exceed our customer's expectation.

Of course, our first responsibility is to our organization but poor supplier and customer relations will eventually eliminate the organization, both competitively and existence. Remember, supplier have to want to do business with those in the organization. If they are treated with threats, poor invoice payments, rule, or other similar behavior they will not want to do business with you. They may keep prices high hoping you will go elsewhere or not quote at all. A reduction the the competitive base results in increased costs, which will impact the profitability of an organization. I believe that the above will assist in your efforts to exceed the expectations that many suppliers and customers have seen too often from the Supply Management Professionals.