supplier questions. But to ensure consistent messaging, all that information should be provided to the supplier base through a primary point person.
As you move to later phases in the initiative (such as finalist presentations, negotiations, award, and implementation), more members of the team become engaged, at which point it makes sense to have members of your team work directly with members of the supplier's team. But as a starting point, designating a primary point person to provide your requirements to the supplier community helps to avoid a large amount of confusion and miscommunication.
LINE‐ITEM DETAIL AND GETTING THE MOST FROM YOUR SUPPLY BASE
End users can provide you with a good understanding of supplier relationships and history, service levels, and other critical aspects of the requirements of the product or service being purchased. You may have even collected some information you did not have before, including contracts or purchasing agreements, specifications and forecasts, or other reports that end users have available. This information is a necessary part of the analysis process, but the most critical piece is probably still missing—line‐item detail of purchases. Looking at your AP or purchase order (PO) data probably does not help. The descriptions in that data are likely to be as inconsistent as the supplier name and transactions at the invoice level. If you have a good inventory requisition system or have implemented a procure‐to‐pay system, you are starting off in a better position than most, but the system may not include all the data you need beyond unit price, such as freight, terms, and additional charges.
You can collect the data that resides within your organization by pulling invoices and manually entering the information into a spreadsheet. Depending on the category and the level of centralization within your organization, this can be a very tedious process and, without an army of interns at your disposal, could extend the sourcing timeline substantially.
The most efficient way to gather the requisite line‐item detail is to request reporting from your suppliers directly. While most companies do not keep good records of the items they buy (particularly for nonproduction purchases) all organizations keep excellent records of what was sold.
Almost all of your suppliers have line‐item details for everything they have sold to your organization and can provide reports in spreadsheet format detailing those purchases. Some, however, are naturally reluctant to do so. Suppliers understand that a customer looking for data of this nature is typically seeking to reduce prices, either through a one‐off negotiation or as part of a bidding and sourcing process. With that in mind, you should consider this request for information as the first step in negotiations with your incumbent supplier. Be prepared for one of three responses to your request: acceptance, avoidance, or pushback.
Response 1: Acceptance
Depending on the category you are sourcing and the quality of the relationship that exists with that supplier, often a request for historical sales information is perceived as business as usual or even an opportunity to partner more closely with your company. The supplier gladly gives you the information you need and even follows up to make sure you understand the data. This is the ideal response.
Response 2: Avoidance
It is often possible to confuse the avoidance response with the acceptance response. A supplier may initially appear agreeable to meeting your request. Weeks later, however, you may realize that you have not received a response. Once the data do eventually arrive, they could be incomplete or not comply with the level of detail the supplier committed to. If the sales representative seems to be saying all the right things but ultimately can't deliver what you have requested, the supplier is using the avoidance response. You can take several steps at this point.
First, when making the request for data, provide a template that shows the level of detail you are looking for. Review the template with the supplier and make sure the representative understands what the template means and agrees it can be populated. Then agree to a due date for completion.
As the due date gets closer, follow up with the supplier and ask for a status update on the reports. If your sales representative appears unsure of the status (or does not appear optimistic about the outcome), request to speak directly to the IT contact responsible for creating the report. This demonstrates that you are serious about your request. It can often help overcome the supplier's stall tactics or help the supplier overcome other challenges, such as time constraints or other priorities (e.g. selling to other customers) if they do legitimately intend to come through on your request.
Response 3: Pushback
Sometimes, a supplier flat‐out refuses to provide a line‐item detail report. This is typically the exception and not the rule, but when this issue does arise, it is important to understand why.
First, the sales representative might not know how to get the reports you need. An inexperienced individual may decide to tell you the reports are not available. Alternatively, they may try to find out how to get them, fail, and then give up. Other representatives may tell you that a report is unavailable in hopes that you will give up the pursuit. For this reason, it is helpful to hold onto any reports you receive when you finally do get them for the supplier's reference the next time you need to make such a request.
Second, the report may truly be unavailable. While this is highly unlikely in most industries, small businesses often do not have access to the same reporting capabilities or sales tracking systems as larger organizations. The push‐back may be due to the great deal of time and effort necessary for creating a custom report or to have someone enter data into a spreadsheet for you.
Third, the relationship between your company and the supplier may not be very good. A supplier who has not been paid on time, has experienced numerous account management issues, or simply does not value your account may decide that a request for reports is the last straw and may even decide to terminate the relationship.
The last reason a supplier may not provide line‐item detail is the most obvious and the most common. The supplier knows they are not competitive, and they want to prevent you from discovering that fact. Similarly, the supplier may realize that negotiations and sourcing are imminent, and the longer they can withhold the data you are looking for, the longer they can bill at current rates before discounting in order to retain the business. In an industry with a limited supply base (one or two predominant suppliers) or situations where the supplier feels the business is secure and can't easily be moved to another supplier, this is the most common type of response.
The pushback response is the most difficult to overcome, but as you can see, the supplier might take this position for many different reasons. It is important to understand your supplier's rationale before formulating your response. If a supplier truly does not have access to the requisite reporting, you may need to look for other ways to collect the data. If a supplier has decided the request is too much of a burden on an already strained relationship, you can look for ways to improve the relationship first and get the data you need later. If you find the supplier is taking an aggressive posture to protect their high margin, you may need to take one yourself to get the supplier to honor your request. You can employ several tactics, including going around your primary sales representative, working with your own internal end users to find a better contact within the supplier organization to get the data you need, requesting a new primary sales representative, letting the supplier know that competitors would be willing to provide the data, or suggesting that an agreement might not be renewed if the request is not met. These aggressive tactics should be used only as a last resort and with a supplier that you are confident has access to the data you need.
You should note that many contracts already include language stating that a supplier agrees to
