Survey: Manufacturers Need to Reduce “Operational Friction” with Their Suppliers

Solutions include streamlining log-in requirements and resolving queries faster, HICX says.

Suppliers are struggling to put their best foot forward as they do business with major manufacturers, and point to complex “operational processes” with those clients as the main problem, a new survey shows. However, the study also showed that manufacturers can harness strong supply chain benefits if they streamline those processes.

The study showed that 61% of suppliers say it’s difficult to deliver their best for key customers, with 60% feeling they spend too much time on customer driven admin, and 47% struggling to get enquiries resolved.

The statistics come from the “Voice of the Supplier” survey report from British supplier experience platform vendor HICX. The firm queried over 500 suppliers, who serve some of the biggest brands in the world across the consumer packaged goods (CPG), fast moving consumer goods (FMCG), aerospace and defense, and energy sectors.

One possible solution for manufacturers is to attain "customer of choice" status with their suppliers. Findings of the study showed that 70% of respondents said that if their key customer is also a preferred customer, their orders would be prioritized. Further, 73% would go the extra mile for one designated customer-of-choice. The figures dropped to 50% and 49% respectively, for those respondents who do not view their key customers as favorites.

To reach that point, manufacturers should reduce unnecessary friction stemming from operational processes. For example, the research showed that over a third (38%) of suppliers need to log in to at least 10 systems to serve their main customer. That process creates headaches for suppliers who must keep track of different login details and processes used to navigate each system.

The study concludes that enterprise manufacturers have an opportunity to harness the full power of their supplier ecosystems, Costas Xyloyiannis, CEO of HICX, said in a release. “The collective knowledge that suppliers possess represents significant value and competitive advantage, however, suppliers can also be a source of potential risk. At the end of the day, we need suppliers. We’re stronger for their information. We benefit from their innovation, and we can do with their support. The relationship is not a zero-sum game. So, we should consider how best to work together,” Xyloyiannis said.

Editor's note: This article was revised on September 7 to clarify that manufacturers, not their suppliers, can adopt the smoother business practices needed to support improved trade.

Written by:  Supply Chain Quarterly Staff, for Supply Chain Quarterly.