Supplier Relationship Management | E. 106

Flourishing supplier relationships can transform healthcare organizations. Samer Haddad, shares his experience of building and navigating successful partnerships with Jim Cagliostro. 

 

Episode Introduction 

Samer explains why trust is the foundation of all successful supplier relationships, the importance of human-to-human connection and why a partnership sometimes means giving your partner the benefit of the doubt. He also outlines the key to a successful exit strategy (plan, plan, and plan) and why solid leadership means treating others as you want to be treated, and leaving your ego at the door.

 

Show Topics

 

Supplier relationship management isn’t just a keyword 

Trust is the foundation of successful relationships 

Managing multiple suppliers is about more than spend

‘’Partnership is a partnership’’

Managing a successful exit strategy 

Leadership tip: keeping your ego out of the way

04:33 Supplier relationship management isn’t just a keyword 

Samer explained how the impact of Covid revealed the importance of strong supplier relationships. 

‘’When the world went into COVID and all the crises that came after that, in terms of shortages and everything, I can make a pretty easy judgment that there was a big differentiator between companies who made it and who maybe struggled mainly was supplier relationship management. Because when the real challenge came to the world, companies that invested in relations, companies that had deepened their relationships, especially with the significant suppliers to their production or to their delivery, whatever that is, made a difference. Those were the ones who were able to actually leverage that challenge to their benefit in the market. So they gained market share. The ones who had superficial relations, maybe more towards purely commercial kind of dealings, I think they struggled because, at such a moment, that kind of... I can't call it a human-to-human relation, or personal relation is where things are tested, and when companies need to make decisions, that's always an element. The trust between those organizations is essentially trust between humans that are doing business for years together. So if you just... we learn from the past two to three years it is I think many of my peers in procurement supply chain will vouch to the importance of supplier relationship management in general and not just like a keyword that you use and throw around…’’

 

07:09 Trust is the foundation of successful relationships

Samer said KPIs can help to measure progress and build trust. 

‘’It takes time to build up that trust. So it is very important when we start a relationship that we create the proper agreement because this is why contracts are there. Contracts manage the relationship between parties. And you're establishing basically a baby kind of relation that has no trust yet, and you need to monitor it and start putting in the building blocks of that relation. Usually, in my opinion, that is established by having mutual mechanisms to judging how companies are engaging with each other. That could be the KPIs that you set. And it's not fair only to set a KPI for the supplier that you're establishing a relationship with, especially if you're looking long-term. Some KPIs should be set, maybe not in the contract, not necessarily, but self-imposed as you manage that important relationship that you know about. So you can even monitor internally how you're engaging with that supplier. Now, if you do that kind of fundamental layer of developing that relationship and you start building upon it, with time, trust starts getting improved and starts growing. It's like a baby, and it grows. It becomes an entity.’’

 

10:24 Managing multiple suppliers is about more than spend

Samer said organizations need to understand how suppliers can impact their business. 

‘’…... But let's say what are the top 10 suppliers that basically can make or break your business? Because each business needs to know these kinds of suppliers. What are the suppliers that, if they don't deliver, you're going to have challenges actually delivering to your customer, or it'll affect your quality, or it might basically put you in a different pricing position in the market, which could basically hurt your business? So you need to understand those really well. And what I see as a common mistake is people treat category management as just a function, just an area. Like supplier relationship management. "Oh, you're a procurement person, so you do the procurement, invoicing, all of that. And by the way, you need to just take care of categories. Also, take care of the supplier relationship." It doesn't work. So especially when it's big business, when there's lots of money being moved around, you need people to focus on those suppliers and those categories. So I would recommend that you really understand the suppliers that drive the goals of your business and, at the same time, the suppliers that probably could hurt you if you don't nurture them. And that has nothing to do with spend, by the way.’’

 

14:41 ‘’Partnership is a partnership’’

Samer said treating suppliers as partners can help to navigate challenges during the contract period. 

‘’You can't go purely by contract. If I have a relationship with a significant supplier and they're misperforming, I can't just jump in and I basically come in with the request that, "You're not meeting the contractual agreement, and we need to go to remedies." That will destroy the whole thing. Partnership is a partnership. When you have a partner, you need to work with the partner. So yes, at some points, you might have to make hard decisions for the business, and yes, your top priority should be your business goals and your business targets. Nevertheless, I would say, depending on the situation, there's no one answer I can say here, but depending on the situation, you need always to give the benefit of the doubt for the partner. If they need help or support, you need to pitch in and help if you can. You need to offer that. You need to understand what's happening because it's easy always to blame the other party for the issues and challenges. You might be either contributing. If not, at some times, you get surprised, and you're causing some of that kind of challenge. So you need to deal with it as a partnership. So you look at the people, so the people you know, call them up or you meet them, you have a conversation around the challenge, you try to understand it, analyze it, break it down, go down a route where you're looking at a structured, logical approach to that problem. You're not there to blame. You're not there still to go for a contract. You're there to solve a problem with them as a partner.’’

 

17:26 Managing a successful exit strategy. 

Samer said it’s essential to have a Plan B before exiting a contract.

‘’…. I assume someone who reached a point where they want to break up a relationship with a supplier, probably, we're talking about here, hypothetically, someone with a deep relations, one of those significant suppliers that affect your business, you need to have your own plan B. And this takes us to the first point I covered. I assume also that you did your job in creating contract that has a clear pathway to exit that relationship. If you have that, okay, so at least you have your map to exit that relationship, but also, you need to get things sorted before you go there. And the point comes where if you ask me, why would you do that? What's the tipping point that could take my company or me personally managing that department or procurement, in general, to go from point A, we have relationship, I need to break it. Well, it's a plethora of things. So it could be simply the attitude of the team on the supplier side that I'm dealing with. Once I see that there's zero care to the business I'm bringing, because sometimes they could grow as a company, my business is not growing at that rate. So I might become a much smaller piece of the pie for them. So things change, but the attitude towards my company is very important… there are red flags and red lines I think you should keep always, even with the best relationship, where you need to say, "I need to stop here, and I need to make a decision." 

 

21:56 Leadership tip: Keeping your ego out of the way 

Samer said knowing that your organization will succeed in your absence is the sign of an effective leader.  

‘’At the end of the day, a solid leader is the one who can have confidence saying, "If I leave today, work will not be affected." I think our ego gets in the way in many cases. I try not to let it affect me. It's a human thing. Everyone has it. I try always to make my decisions separate from fear. So I want my team to be able to generate leaders that could replace me at any moment. It's a hard mental thing to wire, but from my experience, it only pushes you towards growth in your career actually. It doesn't hurt you. It helps you a lot, and it gives you your life back because, today, when I go on leave, I do not look back because I know I have a solid organization, solid leaders in my team that if things go wrong while I'm away, they can take care of things. So treat people like you want to be treated and grow the next generation leaders in your organization.’’

Connect with Lisa Miller on LinkedIn

Connect with Jim Cagliostro on LinkedIn

Connect with Samer Haddad on LinkedIn 

 

Check out VIE Healthcare and SpendMend 

 

 

You’ll also hear: 

 

Samer’s role within Emerson Automation Solutions and the push for sustainability: ‘’…now we're pushing more, especially in this region around sustainability, which again, gives you more reasons to enjoy what you do, and you feel that you are a little bit maybe contributing to that big change that's happening in the region and hopefully for future generations when it comes to the environment here.’’

 

Human-to-human connection is vital to successful partnerships: ‘’If you do the perfect KPIs and you always hit them, and you do the perfect contract, but you don't meet them, and you don't really engage with the supplier, members, and peers at that company, it'll never happen. So people, in my opinion, will establish you as a partner when you meet them, especially face-to-face.’’

 

Effective supplier management needs constant monitoring: ‘’Are we getting the best service? Are they satisfied? Do they have issues from our side? If there are issues from our side, are we addressing them on time? … And I think with that, you address 90% of the challenges and the problems.’’

 

The end of a relationship; deciding early and moving on: ‘’And do not hesitate .. because if you see really good reasons to exit a strategy, it's like maybe, I don't know if it's the right thing to do it, but it's like a divorce, right? Sometimes, if you spend too much time, it might hurt you and hurt your customers more. So, sometimes, it's just better to make a hard decision early and move things on, even if there are challenges. But make sure your business and your customers, first and foremost, are getting the service that they expect from your business.’’

 

What To Do Next:

 

Subscribe to The Economics of Healthcare and receive a special report on 15 Effective Cost Savings Strategies.

 

There are three ways to work with VIE Healthcare:

 

Benchmark a vendor contract – either an existing contract or a new agreement.

We can support your team with their cost savings initiatives to add resources and expertise. We set a bold cost savings goal and work together to achieve it. 

VIE can perform a cost savings opportunity assessment. We dig deep into all of your spend and uncover unique areas of cost savings. 

If you are interested in learning more, the quickest way to get your questions answered is to speak with Lisa Miller at lmiller@spendmend.com or directly at 732-319-5700.