Does size matter? – the truth revealed

You could be forgiven for thinking that suppliers provide better performance to their larger clients. Or those that are more profitable. Or those that represent growth opportunities.

After all, it would make sense that a supplier does everything they could, go the extra mile for their bigger clients.

Well, actually the data gathered in our 2017 Procurement Study tells us that the contract value or the size of the supplier has little impact on the level of performance the buyer receives.

What we found was that the buyers receiving the best performance (greater than 90%) were those that practice transformational supplier leadership principles. They:

  • Motivate suppliers by providing meaning and challenge to the work at hand. They are enthusiastic and optimistic about the outcomes of the contract
  • Lead by example and create trust by conducting business with underlying ethics, principles and values. They go beyond self-interest for the good of the outcomes
  • Pay attention to the individual supplier’s needs and growth potential. They then develop and coach that supplier to realise their maximum potential
  • Challenge the status quo and support innovative ideas and solutions proposed by the supplier

That’s right they don’t use their buying power or size to extract or push performance. Rather they show leadership and use their soft skills to pull and entice performance.

There you have it, the verdict is in – size doesn’t matter. It’s all in how you use it.

2017 Procurement Study

Carrot or Stick?

Keys to boosting supplier performance revealed

Our 2017 research study highlights clearly a number of practical insights that will help your organisation drive much stronger performance from your suppliers.

The report hightlights:

  • What performance buyers typically get from their suppliers
  • What suppliers recommend buyers should do to improve the suppliers performance
  • What interventions actually work to lead suppliers to better performance
  • Differences between managing contracts in the public and private sector
  • Three things you can do today to improve supplier performance