Relevance is key
Ensuring relevance is critical in any form of engagement, no less supplier engagement. Failure to maximise relevance will quickly result in the loss of an audience’s attention and the ultimate failure of you getting your message across and driving the desired action.
During such a volatile and fast-paced time as we are currently experiencing with the COVID-19 outbreak, retailers must ensure they maintain engagement through high levels of relevance as part of supplier engagement and communications activity.
A New Model for Supplier Segmentation
Within this article, I share a different way to consider supplier segmentation within your COVID-19 supplier communication management planning to maximise relevance and navigate your way through these challenging times. By continuing to foster a One Team culture with your suppliers, you will get the results you need.
The following model may appear a little abstract on first glance, but I hope it'll become apparent why it is so applicable to those managing supplier engagement activities during the COVID-19 outbreak.
The “Managing Stakeholder Pressures” model (Agle, Mitchell and Wood, 1997) is typically used in the analysis of sustainable and responsible business practices. With its primary function being the mapping of your responsibility to and influence over a range of stakeholders.
Within the context of COVID-19, retailers must traverse a narrow line between their responsibilities to customers, employees, shareholders and suppliers. And as such, this model helps visualise those responsibilities in a way that is directly actionable.
COVID-19 Supplier Communications Segmentation Exercise
The following exercise will take around an hour and result in your being able to prioritise communications to different parts of the supply base. Potentially more importantly, it’ll also give you a solid foundation for articulating your approach to the wider business and gaining their support.
The model is based upon a traditional Venn Diagram. By qualifying in or out of the following criteria, place your suppliers or supplier groups into the right segment to confirm their type.
Nothing is black and white and there will be a few suppliers that don’t fall neatly within the segment. Discuss the nuances of these. This model isn’t perfect, but it does help drive the right conversations.
Within the context of retail, power relates to the significance and size of your relationship with the suppliers.
- How many lines are you reliant on that supplier for?
- Do they provide key capabilities or infrastructure to you?
- If they went under, how bad would it be for you?
Whilst all suppliers have legitimate claim to your attention as a by-product of their commercial relationship with you, how much of a claim to your attention do they have during the COVID-19 crisis?
If their business is relatively – and I stress relatively – unaffected as a result of the situation, they have a less legitimate claim to your attention than, say, a toilet roll manufacturer.
Urgency relates to either the urgency of supply continuity, or to their business’s continuity. For example, if using a similar case to above, there is a high level of urgency within your hand sanitiser supply relationships.
Likewise, there is a high level of urgency within those smaller suppliers to which their business relies upon you for cash flow. Morrisons has set the standard with its response to these suppliers with its pledge to pay small suppliers immediately.
Potential actions for each segment
Whilst how you choose to engage and communicate with the suppliers within each segment will be unique to your business and the situation at that time, here are some examples of how the model could inform your approach in a rough order of segment importance.
For each segment, I’ve given one example based on each of the three pillars of supplier engagement: Communications, Transparency and Support. Click here to learn more about how this can help your COVID-19 communications planning.
Definitive (Power, Legitimacy, Urgency)
e.g. Strategic Supplier supplying a line where panic buying is impacting availability
- Weekly Zoom, Webex or Google Hangouts “top-to-top” meeting between senior leadership of retailer and supplier.
- Shared KPI reports (e.g. availability, sales, forecasts, quality).
- Assigning buying assistant or support person to expedite information sharing and SME identification for troubleshooting.
Dependant (Legitimacy, Urgency)
e.g. Small suppliers whose cashflow is dependent upon you for their business’s survival
- Weekly email updates on what your business has done to help them with signposting to available government support.
- Clear channel of escalation for when their situation becomes critical and they require intervention immediately.
- Accessible, online FAQs around temporary payment process changes.
Dominant (Power, Legitimacy)
e.g. Strategic Supplier supplying a line where there is relatively less impact on supply
- An open, honest but firm email from Head of Buying asking them to be patient as you prioritise where the biggest challenges are.
- A shared issue log to crowdsource ideas and approaches to the emerging challenges.
- A weekly webinar or online group meeting sharing your approach and providing a forum for those suppliers to ask questions or propose solutions to challenges.
e.g. Most suppliers
- Fortnightly broadcast emails providing an update on your approach to the outbreak.
- Business-as-usual online performance dashboards (sales, complaints, service levels).
Accessible, online FAQs or knowledgebase articles covering the anticipated questions.
S4RB is currently supporting retailers with the planning and execution of supplier engagement for COVID-19. If you’d like to contact David for practical advice and guidance about your organisation, please click here.