Mastering communication in procurement and supply chain

In the dynamic world of procurement and supply chain, success hinges on far more than just technical expertise and market knowledge. At the heart of every smooth-running operation lies a crucial, yet often overlooked, element: communication.

This article explores the vital role of communication in procurement, offering strategies to enhance your skills and leverage them across various scenarios.

Why communication matters in procurement

Effective communication is the cornerstone of procurement and supply chain success. Here's why:

• Building trust and collaboration: When communication is open and transparent, trust flourishes. This allows for collaborative decision-making, where diverse perspectives are valued, leading to better outcomes for everyone involved.
• Streamlining processes: Clear communication eliminates ambiguity and confusion, ensuring everyone involved in the procurement process understands their roles and responsibilities. This reduces delays, minimises errors, and streamlines the entire procurement cycle.
• Managing risks: Whether it's a supplier delay or a change in project specifications, open communication ensures everyone is on the same page and can adapt quickly. By proactively communicating potential risks, you can develop contingency plans and minimise their impact on the project.
• Building strong supplier relationships: Effective communication fosters strong relationships with vendors, leading to better pricing, reliable deliveries, and a willingness to go the extra mile.
• Enhancing procurement's brand image: Procurement is often seen as a cost-cutting function. But through effective communication, you can showcase its strategic value and its role in driving business success. Communicate cost savings/avoidance achieved or the positive impact of supplier partnerships on quality control to elevate your department's profile.

What do communication skills entail?

Before diving into the specifics of different communication channels, let's define what we mean by communication.

Imagine communication as a four-step dance between two people:

1. Idea formation: You come up with a thought or message.
2. Crafting and delivery: You translate that message into a form best suited for the situation and pick the best channel (written report, presentation, oral etc.).
3. Decoding: The other person receives your message and tries to understand it.
4. Feedback: Their response becomes input for you, and the cycle starts again.

So, what makes someone a good communicator? It's about mastering the skills involved in each step. You may be good at a couple of things already but it’s always good to see the full picture to identify areas for improvement.

Gathering the input:

• Active listening/reading: Truly hear and absorb what's being communicated.
• Idea capture: Remember or record key points for later use.

Processing and refining the message:

• Brainstorming: Generate different ways to approach the issue.
• Summarising: Capture information from different sources.
• Critical thinking: Build on existing concepts for deeper understanding.
• Data visualisation: Present information visually using appropriate charts and diagrams.

Delivering the message (output):

• Writing
• Presenting/speaking including non-verbal communication

Internal communication: communicating with stakeholders

Managing expectations and ensuring alignment with stakeholders is crucial for procurement success. Here's how to refine your communication with different stakeholder groups:

Understand your audience

Identify key stakeholders for each project and determine their preferred communication style (e.g. detailed reports for finance, brief updates for operations). Consider factors like their level of technical expertise and their role within the organisation.

Tailor your message

Linking to the above, adapt your communication based on the stakeholder. Use simpler language for non-procurement team members, focusing on how the procurement process aligns with their goals. For example, highlighting how your sourcing strategies contribute to cost savings for the organisation can resonate with a non-technical audience. For senior management, highlight the strategic value of procurement – showcase cost savings, cost avoidance, improved supplier relationships, influence on client satisfaction etc.

Embrace collaboration tools

Ditch clunky email chains and fragmented information flow. Cloud-based procurement software like Felix allows you to complete tasks such as getting approval from multiple stakeholders and prevent bottlenecks. Utilise built-in reports for progress updates (e.g. percentage of tasks completed, outstanding approvals), and shared document repositories (centralised location for RFPs, contracts, and supplier information) for everyone on the team to access the latest information.

Standardise internal reports & templates

Develop clear and concise templates for internal reports like vendor status summaries and project status updates. These reports should be tailored to your specific department and stakeholders. Include key data points relevant to the audience, such as cost savings achieved, potential risks identified, and milestones reached. This is usually done by exporting data from procurement systems into tools like PowerBI.

Foster open communication

Encourage your team to share concerns and suggestions freely. Hold regular team meetings (weekly or bi-weekly) where everyone feels comfortable contributing ideas and discussing challenges. This fosters a collaborative environment and strengthens communication.

Building strong partnerships: communication with suppliers

Business-as-Usual (BAU) mode

• Prequalification or onboarding: Whilst this can be done as a standalone process or as part of a tender, be crystal clear what information you need, in what format. Check out our previous article on supplier onboarding best practices.
  
  
• Supplier portals: Consider utilising online platforms to share information and documents with suppliers in real-time. This fosters stronger relationships and improves overall supply chain visibility.
  

• Transparent contracts: Ensure contracts are clear, concise, and free of ambiguity. Use plain language and avoid overly technical terms. Clearly outline expectations, timelines, and dispute resolution mechanisms. Transparent communication from the start minimises misunderstandings later.
  
  
• Regular communication channels: Gauge supplier relationship/interest by engaging vendors for various purposes beyond onboarding or re-qualification, such as surveying for additional compliance information, checking project status updates, issuing Non-Disclosure Agreements, or collecting general feedback.
  
  Pro tip: Ditch the email chains and chasing for responses manually. Use a tool such as Felix to send ad-hoc questionnaires, send reminders, set up approvers and so on to maximise response.
  
  
• Two-way feedback loop: Don't leave suppliers guessing. Provide timely and constructive feedback on their performance. Acknowledge their successes and suggest areas for improvement. This feedback loop strengthens the relationship and helps to continuously improve the procurement process.
  
  Pro tip: Make a list of vendors with low performance scores using your vendor management system such as Felix, then lodge any notes against their profiles after having a coaching/feedback session with them. This can help you track any performance improvement over time, or prove that you’ve followed a process before deciding to offboard/ flag them for suspension in the system.

Project/Tender mode

Tender phase

• Clear and concise tender documentation: Ensure tender documents are clear, concise, and free of ambiguity. Use plain language and avoid overly technical terms. Clearly outline expectations, timelines, evaluation criteria, and post-tender interview procedures.
  
  Pro tip: Use a dedicated tender management tool like Felix to upload all necessary documents so everyone can access them whenever they need. Even if you need to make changes to any document after issuing an RFQ, vendors can still be informed with notifications. Or if you’re using a document management system that Felix integrates with, any revisions made to documents made in one system will be reflected in Felix, then you can follow the same process to notify vendors.
  
  

• Respecting vendor confidentiality: Be clear when communication is one-on-one, and confidentiality is respected (except when clarifying the original brief). If vendors trust you'll keep their information confidential, they'll be more open about their capabilities.
  
  
• Controlled communication: Communicate about a communication plan up front, i.e. when and how often interaction points are between you and the vendors throughout the sourcing process (think conference call, workshop). Planned communication reduces the need for ad-hoc calls and emails. Be available for urgent queries while politely but firmly directing others to follow the communication plan. This saves everyone time and keeps communication focused.

Be sure to check out our previous post “How Felix supports transparent vendor communication during tendering.”

Post-tender

• Objective evaluation criteria: Before sending out a tender, define clear and objective evaluation criteria for mapping vendor responses. This ensures a fair and unbiased selection process.
• Post-tender communication: Communicate the outcome of the tender process to all participants in a timely and professional manner. In other words, make a good impression rather than “ghosting” tenderers, who knows what opportunities down the track this could bring.

Additional considerations

• Negotiations: If negotiations are necessary, ensure they are conducted fairly and transparently. Don't allow a preferred participant to improve their response in a way that disadvantages others. Treat all participants equally and document the process carefully. A good tender management platform should already have audit trails for this purpose.
• Best and Final Offer Process (Optional): If a best and final offer process is used, treat all participants involved equally and follow standard probity practices.

The role of technology in communication

Technology plays a crucial role in streamlining communication within procurement. Cloud-based procurement software like Felix offers a comprehensive suite of features that can enhance the way your team communicates:

• Centralised communication hub: Felix acts as a central hub for all procurement-related communication. Project dashboards, vendor portal, and shared document repositories eliminate email chains and fragmented information flow.
• Real-time collaboration: Procurement teams can collaborate in real-time, fostering faster decision-making and improved agility.
• Enhanced transparency: Everyone involved in the procurement process has access to the latest information, promoting transparency and building trust.

Conclusion: putting it all together

Throughout this article, we've explored the critical role of communication in procurement and supply chain management. From internal stakeholder interactions to supplier relationships, effective communication is the thread that weaves successful procurement practices together. 

Let's revisit how the skills apply across the board:

1. Idea formation: Whether you're crafting tender documents or planning stakeholder meetings, the ability to generate clear, purposeful ideas is crucial.
2. Crafting and delivery: Tailoring your message for different audiences - from technical teams to senior management to suppliers - is a skill that permeates all aspects of procurement communication.
3. Decoding: Active listening and reading are essential when gathering input from stakeholders, understanding supplier responses, or interpreting contract terms.
4. Feedback: The two-way communication loop, especially in supplier relationships, demonstrates how feedback becomes input for continuous improvement.

As you move forward, consider each procurement task through the lens of these communication skills. Whether you're negotiating contracts, managing stakeholder expectations, or fostering supplier relationships, your ability to communicate effectively will be the key to your success in the dynamic world of procurement and supply chain management.