Supplier Preferencing or Where Should I Drink?

How important are you to your suppliers? Do they want to keep you as a customer and treat you well, or do they think you’re a bit of a nuisance? This is called supplier preferencing and it’s all about making sure you’re with the right supplier.

The Supplier Preferencing 4 Box Model

The model compares the value of your business with them, which is usually how much you spend against how attractive you are as a customer.

I like it because it highlights that we can be an attractive, worthwhile customer without spending huge sums of money. In Procurement, we can get stuck on thinking that we’re only valuable as a customer if we spend more with them, but this isn’t always the case.

We’ll look at how to be a more attractive customer later.

Why should I care about Supplier Preferencing?

The way a supplier perceives your business will affect you in two ways:

  • The level of customer service received
  • How high your prices are
CoreThe supplier values you and wouldn’t want to lose you as a customerBetter pricing and excellent customer service
DevelopThe supplier wants more of your businessGood pricing, introductory prices and latest offering of goods/services
NuisanceThe supplier will take your business, but they see you as a bad customer and would prefer you shopped elsewherePoor service, lack of information on their goods and services, poor pricing
ExploitThe supplier sees you as someone to get the highest profits fromService could be good but prices will be high, they want to keep you as a customer but it’s not in your best interests

Supplier Preferencing & Where I Should Drink

To apply supplier preferencing, you need to think about how your suppliers treat you. It relies on making some assumptions about how the supplier views you, but you can confirm these when you speak with their account manager.

Applying this model will be really individual to your own organisation, so here’s a personal example from me of places I drink in Norwich.

Core – The Wallow

I LOVE The Wallow. I go there regularly, I introduce new people to it, I rave about it on social media…

And I get excellent customer service. They’ll let me know about their new wines and I pretty much always get a table.

Develop – The Cat & Canary

This is another good spot for how your suppliers see you.

I live not too far from the Cat & Canary. It’s a great pub, it has a big range of ciders.

But… I don’t go there that often. So the pub should be trying to entice me in.

Nuisance – Revolucion de Cuba

Oh oh. This isn’t a good place to be.

Suppliers would rather you didn’t bother buying from them. And to be honest, I could do without going to a chain that puts too much sugar and ice in its cocktails 🤷‍♀️

Exploit – The Waterfront

Another bad place.

I go to the Waterfront because I love screaming the lyrics to my favourite songs.

I can’t do it anywhere else, which is why they can charge me £5 for a drink I don’t even like.

How to Be An Attractive Customer

An good way to be seen as a more attractive customer is to increase your spend with them by consolidating from other suppliers. This isn’t always possible, however.

So some other ways to be more ‘attractive’ (that aren’t about sending them your organisation’s latest naked calendar) are:

  • Buy the latest products instead of legacy items
  • Pay on time
  • Give accurate and timely demand forecasts
  • Be nice when you speak to them
  • Take an interest in their organisation and what they’re trying to achieve
  • Tie into the company’s non-monetary goals, such as helping them meet sustainability targets
  • Become a pilot site for new products/services
  • Give testimonials
  • Have a prestigious brand that they want to supply into

Is there anything else that you would add? Let me know in the comments!

Leave a comment

Your email address will not be published.