Supplier Relationships 101

The title sums it up pretty well. Let’s think of the relationship between buyers and suppliers like a rubber band. We all know there is give and take – elasticity between the two. But we also know, you stretch it too much, it never will go back to its original shape.

So if you decided to stretch your supplier relationship like a rubber band, as far as you can, you better hold on damn tight for dear life. Because if that thing comes back at you and hits you in the face, it’s going to have one hell of a zing. And you pretty much deserve it at that point.

Check out this article link to find out the most ridiculous terms for an RFP I’ve heard of to date: AdWeek Article. Here’s a quick recap if you don’t have time.

General Mills RFP Terms

• You will only win to be on a “LIST” for potential suppliers for projects to be bid out to
• Contract matters like “responsibility for matters like unauthorized usage lawsuits to the agencies,” instead of the GM employee who approved it.
• 120-day payment cycle (really?? 4 bloody months?!)
• No compensation for pitch process and ownership of IP
• Blind Briefs – i.e., You don’t know the brand, contract length, potential for other winners, or nature of the request. I’m guessing even Helen Keller would give them the finger on this one!
• No AOR (agency of record – guaranteed work) – all work will be pieced out by project

Category Management Mondays

Testing Supplier Relationships

Whether you are the supplier or the buyer, common sense tells you what is going on in the article is asinine. Not get paid for months? Awesome, let me get another mortgage on my home to be able to pay my bills. Complete ownership of the creative concepts? Sure, where do I sign up so I can burn the paper I’m signing to do it all for free?

Sadly, I believe Interns get paid more than an outside supplier would for a month’s worth of work — not cool General Mills, not cool. And after reading through this article, these were a few of my other immediate thoughts…

• What a-hole came up with this? (*Crosses Fingers* Please don’t say Procurement…)
• What’s the margin or ROI on the potential $600M? 1%? 10%?
• Is this the breaking point for suppliers to give the business the middle finger? I vote, yes.
• If this is how the RFP is set-up, can you imagine how they are while you are working for them? (I’m honestly just not seeing where the positives start in this case for the suppliers…)
• We need to redesign the pitch process for Agency RFP’s, because if this isn’t going too far, what is?!
• How harsh is the Supplier Review / QBR Process?
• What other obnoxious contract terms have they thought of, tried, and that didn’t work? (This one I’m dying to know!)

Real Supplier Relationship Managment

Now, I can understand some of these terms, as a few or either standard (not paying for a pitch) or have become standard practices for those with the big budgets. I’m looking at you Ab InBev. But that doesn’t necessarily mean they are right. Just because you can flex your muscles, doesn’t mean you should to a point where you hurt everyone involved.

And quite frankly, how badly are you trying to screw up the work environment? What type of culture do you have that you think you can abuse anyone who walks through the door? (And for what, Cereal? At least AB InBev has booze)

It appears to me, the ones with big budgets, have forgotten one keyword in SRM – Supplier Relationship Management. You can’t create something that is exceptionally one-sided and expect it to last – especially in the cases of relationships.

Suppliers can and will fire clients when they decide it’s not worth the money. There has to be some time of reciprocity and respect. Quite frankly, it just feels like we’ve moved back to the days of the coal mines and company store, where someone ends up selling their soul. And eventually, we’re going to see the agencies giving these big providers the middle finger, which won’t be suitable for anyone.

So take note big companies and marketing folks with big budgets.  You stretch that rubberband too far, and it will probably come back and snap you in the face. Just sayin. Be prepared!