As a fan of black and white 1950’s crime dramas, films found in the dusty corners of cable television, I enjoy the interplay of the gangsters and assorted bad guys. Afraid of being overheard by the police or their underworld enemies, they developed a code of communication that was compelling: Don’t speak when you can nod…and don’t nod when you can wink.
While not trying to equate buyers as members of the nefarious movie underworld, the communication code these days for some might be similar: Don’t visit when you can call, don’t call if you can e-mail, and don’t e-mail if you can text.
Unfortunately, this code doesn’t serve business people the way that it did bad guys. Buyers leave too much on the table by not engaging in direct negotiations with suppliers.
Even though I like old movies, I am a 21st century supply chain professional who advocates a situational blend of personal and digital communication. Automate the transactional communication and personalize the business communication. Stronger business relationships are built on face-to-face, or at least ear-to-ear communication, and those live events enhance the relationship while balancing the negotiation process.
I see supplier communication in three distinct levels. Let’s call them the 10,000-foot view, the 5,000-foot view, and the 1,000-foot view.
The 10,000-foot view drives daily commerce. Our global supply base, with its 24/7 operation, survives on virtual digital communication. The transfer of data and information through enterprise resource planning (ERP) systems and other protocols is critical. The familiarity, ease, and efficiency of digital communications are not in dispute at this level. In fact, it will continue to expand.
The 5,000-foot view takes a more personal approach to communication in managing a supply base or commodity areas. Yet, this intermediate communications step is increasingly taking on a more digital flavor with automated supply chain software replacing a large portion of human interaction. Efficient and effective to be sure, but it can degrade supplier relationships a bit. Automating all communication, what some software vendors call supplier relationship management, sidesteps important steps in the negotiation process.
But it is at the 1,000-foot view that is upsetting the balance of power in many buyer seller relationships. At its root, supply management is a people business and crafting strong supplier relationships with key suppliers is critical. That work needs to be done with a largely human approach from both sides of the table. Buyers who negotiate through e-mail and spreadsheets are selling themselves short. Sellers, noting how buyers may not be emotionally involved in the negotiation process, find it easier to maintain an arms length relationship and take a stronger position in negotiations. There is comfort in autonomy.
Power goes to the seller when the buyer seems disengaged. Speaking about cost savings or process improvements face to face in a conference room or factory floor carry more weight than in an e-mail or newsletter. Human behavior plays a huge role in negotiation and it can get lost in bits and bytes. Using another movie quip…I like to see the their eyes.
Some may feel that these communication issues are generational in nature, or caused by staffing issues and performance pressures, as well as trying to manage far-flung suppliers. And that may be the case. But in my travels, I find less and less supply chain pros enjoy and appreciate the negotiation process. They look for ways to avoid it, often hiding behind the digital divide. With disengagement, the balance of power stays with the seller and that is not always the best outcome.
Remember, that we just don’t negotiate price, but continuous supplier performance. That work requires an active role and a full complement of communications tools.