4 Ways To Improve Procurement For Increased Customer Satisfaction
Andrew Thomas, founder of Skybell Video Doorbell, reports that it takes roughly 40 positive customer experiences to undo the damage of a single negative review. With stats like that, it’s easy to see why customer satisfaction influences customer loyalty, retention, and even your ability to attract new customers. If one element of a business’ product or service dissatisfies a customer, the rest of the business can suffer, majorly impacting your bottom line.
Though it’s often overlooked as an element of customer satisfaction, procurement is an essential component for delivering that satisfaction. Procurement involves buying goods and services that keep an organization operating; it ensures warehouses are well-stocked with the proper supplies at all times. Procurement can be responsible for up to 70 percent of a company’s revenue, so small changes in procurement functions can have a major impact on profitability.
Procurement tasks traditionally include ordering, sourcing, and contracting. In simpler terms, it provides an organization with the right goods and services, at the right time, in the right place, for the right price.
While one might assume that procurement is worlds away from the services driving customer satisfaction, creating value in a product or service starts from the very beginning. It’s time to redefine procurement’s traditional role with a singular mission: to directly support the overarching goals and objectives or the company. Doing this will make companies more customer-centric and orient them toward higher levels of customer satisfaction.
4 Ways to Improve Procurement
Maintain Good Supplier Relationships
This might seem like a simple and obvious way to improve your procurement operations, but maintaining a positive supplier-buyer relationship is a vital component in ensuring good delivery, service, and quality.
As international supply chain executive Sara Ireton indicates in Industry Week, it’s important to recognize “the success of one partner helps the success of the other.” You need to be dedicated to growing your supplier relationships through trust, honesty, open communication, and ethical business practices, especially the basic practice of paying in full and on time.
Building and maintaining supplier relationships can streamline processes and improve your overall efficiency. It also helps pin down which vendors can deliver on short notice, or which will offer better pricing so you can schedule production in advance to ensure on-time and in-budget deliveries for your customers. In return, your customers can receive better service, lower prices and greater innovation, all at lesser risk.
Improve Inventory Insights
Procurement professionals have great analytical skills. They must juggle the planning and execution of multiple projects, deal with multiple vendors, and negotiate the best deals for their business. To make the most of these skills, procurement professionals need to incorporate technology into their data-driven decision-making processes.
An in-depth understanding of quantitative data is essential for making the best financial decisions for your company. Technology solutions like enterprise resource planning software can provide greater visibility into myriad areas of your business critical to meeting customer needs. They provide procurement insights and inventory management functionalities to ensure you have the materials your business needs, when you need them, and at the optimal cost.
Take Corporate Social Responsibility Seriously
Taking on green initiatives and ensuring your carbon footprint is as small as possible are no longer niceties, they’re necessities. As previously mentioned, consumers take environmental impact and social responsibility into consideration when making purchase decisions. In particular, Millennials – now the largest segment of consumers – are most interested in the social good behind the products they buy. A study by Nielsen indicates “Despite the fact that Millennials are coming of age in one of the most difficult economic climates in the past 100 years, they continue to be most willing to pay extra for sustainable offerings — almost three-out-of-four respondents.”
For this reason, businesses should refocus their procurement processes to operate responsibly. It might seem intimidating to assess the social and environmental impacts of hundreds of different suppliers, but it’s often best to trace your way back to original equipment manufacturers and raw material producers. Assessing businesses at the very beginning of the distribution chain helps determine important factors about your supplier network, including the primary energy resources it uses or its home country’s corruption levels and labor practices, to name a few.
Increase Employee Training and Development
A study by The Hackett Group found 77 percent of chief procurement officers consider aligning procurement skills and talent with changing business needs to be of “high” or “critical” importance. As businesses continuously work to optimize their value and efficiency, procurement organizations have begun looking to diversify their workforce’s talent and skills, seeking out educational and professional experience ranging from physicists to data scientists.
Innovative training solutions are increasingly being adopted by leading procurement organizations. For example, eLearning solutions, combined with webinars and workshops, can allow professionals in the field to further their learning. This can be considered an investment in the company, by empowering its employees to make the best decisions to advance and improve its procurement processes.
Customer satisfaction can make or break a business’s future, so adopting a customer-centric approach throughout all operations is vital. From sourcing materials to after-sales service, all business functions play a role in creating customer value. Your procurement operations can play an integral role in your customers’ satisfaction, so taking time to improve your capabilities wherever possible will benefit you in the long run.
Slimstock has been helping companies like yours lower inventory costs while increasing customer satisfaction for 25 years. Our inventory management software is used by over 900 customers worldwide to free up capital and simplify the ordering process. Chat with one of our friendly customer service reps today to learn how we can help optimize your inventory.