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In This New Period Of Uncertainty, Effective Procurement Is More Essential Than Ever

By Jo Causon, CEO, The Institute of Customer Service

The government’s announcement earlier this week of a raft of new coronavirus restrictions marks entry in a new period of challenge and uncertainty for businesses across the county. It also serves to confirm the need to be responsive and agile as we manage through a range of new challenges and decisions; preparing for the short to the medium term and of course, the forthcoming exit from the European Union. As we have seen throughout the course of the pandemic, when navigating these challenging times, maintaining a clear focus on our purpose and offering strong customer service is vital for survival. With so much of our economy linked to the service sector, the service experience goes far deeper than simply the manner and training of the person behind the till or the phone; it spans an interweaving web of suppliers and services.

For many organisations, delivery of an excellent customer experience relies heavily on the use of third party suppliers. As such, organisations must ensure they have effective procurement processes in place to ensure these suppliers are operating effectively and helping to meet the changing demands of their customer base. Procurement is often viewed as a dull or boring element of an organisation’s operations – but in reality, it is a crucial function to deliver effective customer management. Procurement failures can not only result in increased costs, but also significant reputational damage.

In the current volatile climate, where customers are increasingly discerning with where they choose to spend their money, businesses cannot afford to deal with these kinds of mistakes. The added dimension of ensuring we have an effective supply chain as we move forward is something that many organisations will need to focus on. Therefore, choosing the right supplier to fit the culture of your organisation, and looking to build long-term relationships, is critical.

Recent research from The Institute revealed that, when asked to prioritise areas that are critical to procurement, a significant proportion of organisations continue to give a higher weighting to cost. Whilst this is of course a highly important consideration, particularly as the financial realities of the crisis continue to bite, it is important when reviewing procurement decisions in the context of the customer experience not to get too drawn in to a narrow interpretation of cost. Instead, organisations must keep a close eye on the long-term; weighing up immediate savings against the potential future implications of poor partnership decisions. Facts such as impact on customer satisfaction, sustainability, revenue growth and reputation must be factored in – on top of already highly weighted factors such as confidence in a supplier’s ability to deliver, quality of service and regulatory compliance.

It has long been the case that the most effective procurement is that which is based around effective relationship management – and that rings even more true in the current climate. Long term partnerships built on mutual trust and respect will see greater long-term returns, as suppliers drive to seek out opportunities that create mutual value, rather than simply ‘ticking the box’ of their contractual obligations.

There is a danger that the commercial and technical competence of procurement teams can override the valuable insight those working ‘on the ground’ have into the minds and need of the customer. Indeed, our research showed customer experience managers are much less likely to believe that their organisation manages its supplier relationships effectively or that suppliers genuinely benefit the organisation’s business performance than those working in procurement roles.

Whilst procurement teams play a vital role in enabling clarity, consistency and governance in the procurement process – it is important that this is balanced against the deep understanding of the customer garnered from those working in other areas of the business. Organisations should focus on building an open, honest dialogue between procurement teams and other colleagues, to ensure all eventualities and nuances of the customer experience are considered in the decision making process.

As we move forward to the next stage of the pandemic, it is inevitable that we will see an even greater emphasis placed on cost and value within organisations. Procurement teams will be under greater pressure to analyse and assess areas such as the financial stability, supply chain resilience and contingency plans. However, there are further factors at play that should be given consideration. Even before the pandemic hit, we had seen a trend towards customers seeking out more sustainable, transparent and open businesses. As the crisis continues, it is likely that customers will become even more discerning – and choose to engage with brands that share similar beliefs and values to their own. As such, consideration must also be given to all aspects of ESG, with a clear approach to environmental sustainability and social impact within procurement decisions.

It is clear that the crisis is far from over, and there will be difficult challenges to overcome as we move forward. However, businesses must keep an eye on the long term, and avoid knee-jerk decisions to make short term savings, that could lead to future damage to the customer experience.

Jo Causon

Jo Causon

Jo joined The Institute as its CEO in 2009. She has driven membership growth by 150 percent and established the UK Customer Satisfaction Index as the country’s premier indicator of consumer satisfaction, providing organisations with an indicator of the return on their service strategy investment.

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