Moving beyond Supplier Performance measurement. Leveraging Supplier Satisfaction using SAP Ariba and Qualtrics
Supplier performance measurement has been traditionally used as one of the main business process to evaluate and improve supplier performance. Buying organizations generally rate suppliers on different metrics like delivery, quality etc. to evaluate supplier performance. As these methods are internally focussed, they miss out to measure the impact of lower supplier satisfaction on supplier performance. As supply chains are becoming more collaborative, without measuring supplier satisfaction it would be very difficult to maintain successful buyer-supplier relationships
One of the major components lacking in such measurement is holistic evaluation of suppliers point of view. Many a times dramatic improvement might be possible by having a joint feedback of supplier and internal stakeholders. For e.g. as suppliers are more aligned to markets they may be able to provide crucial benchmarking feedbacks which could lead to improvement in overall product quality, payment compliance etc. Such a collaboration is only possible if we can involve voice of supplier into internal business processes on a real time basis.
This area has been historically a gap, due to lack of systems providing integrated approach for measuring procurement transactions and supplier feedback. It is possible to send standalone supplier surveys and capture their feedback. However, they could not provide much benefit due to lack of accurate assimilation of related transactional and operational data. Actionable insights can only be received if we can relate supplier satisfaction to the instances of operational transactions.
Solution using SAP Ariba and Qualtrics:
This is where SAP Ariba and Qualtrics comes in and fits the gap. Qualtrics being the leading tool for experience management can be seamlessly integrated with operational data from Ariba to deliver powerful supplier satisfaction analytics with multiple dimensions to slice and dice the data. Armed with AI/ML capabilities, Qualtrics provides intelligent way to mine the textual data from suppliers into meaningful information. Critical insights into supplier sentiments could be gained which can point towards innocuous process inefficiencies which are generally ‘hidden from plain sight’.
These insights can be used to trigger actions from Qualtrics to Ariba buyers or suppliers for follow up tasks on improving the supplier satisfaction. The actions could be small but can offer handsome returns due to their impact on supplier engagement. So this offers a 360 degree closed loop approach to incorporate supplier feedbacks.
Some of the real world use cases of this solution are:
- Improvement in RFx participation and competitiveness: By drilling into feedback of suppliers who declined RFx response, we can remove the bottlenecks from the RFx process. For example, there could be feedback from supplier on RFx specification complexity leading to lower participations. By streamlining specifications, it is possible to increase supplier participation
- Improvement in contract negotiation lead times: Many a times, a specific contract clause could be pain area for most of the suppliers. By mining into specific comments of suppliers, it is possible to identify the clauses which are generally taking a lot of time and can be modified to ensure better negotiation.
- Reduction of supply risks : As we are measuring supplier sentiments on regular basis, it is possible to identify any potential supply risks and take mitigation measures. For example if strategic suppliers are not recording better satisfaction, then it could point to future supply and quality risks. This could be mitigated by taking action to improve supplier satisfaction or by engaging new alternative suppliers.
How to embark on this journey :
It is clear that future supplier relationships would need to incorporate supplier satisfaction as an integral part of procurement processes. Hence a roadmap must be defined to attain tangible business goals. Starting with simple business case to establish business benefits would be ideal approach to start with. As SAP Ariba and Qualtrics use lean integration set up, technically it may not be challenging to begin a quick pilot. However more time would be needed to identify the survey / analytics requirements and the actions which would need to be integrated into Ariba business processes. Survey questions must be designed for simple and intelligent feedback measurements.
By iterating over pilot use case, it is possible to improve and broaden the scope to include more use cases. Ariba and Qualtrics can also be used to measure buyer satisfaction based on different touchpoints. Thus many use cases are possible to develop.
Overall, this should be viewed as a transformational journey towards creating robust buyer-supplier partnerships through inclusive involvement of all stakeholders.