KiwiRail supplier relationship journey
Kriza Young, Procurement and Process Improvement Manager, KiwiRail, is passionate about supplier relationship management (SRM), the management of relationships between agencies and suppliers to deliver more value for government.
In sharing KiwiRail’s experience she acknowledges each organisation will have a unique journey, but she says the process is transferable. Kriza shares KiwiRail’s supplier segmentation process with David Graham, New Zealand Government Procurement’s Manager of Supplier Relationships.
The power is in understanding and applying a systems approach. Our exact approach won't suit or be the same for a small organisation, but segmenting your suppliers, and keeping on interrogating the data for each, will reveal much. What it reveals is always actionable and will help mature your supplier management relationship journey.Kriza Young, Procurement and Process Improvement Manager, KiwiRail
Kirza explained how KiwiRail segmented their suppliers. First, they created three addressable spend categories – small, medium, and large annual amounts. They then removed their one-off spends to create three groups of BAU suppliers. These three groups were then split into subcategories, ie ‘Corporate suppliers’ were broken into financial/legal, HR, travel, office supplies etc. They were finally categorized into segments called: protective, productive and progressive relationships.
“The first is about risk – we want to understand that and protect ourselves from any risk, the second is where we could achieve more from the relationships through looking at timing, sequencing, or reducing waste, and the third is in the really exciting area of innovation. How can we, with our suppliers, change it up or even influence the market?”
David Graham says, “Kriza walks the talk when she says the KiwiRail journey has lessons for all. They acknowledge they are just starting their journey but through their systematic approach, coupled with a healthy dose of curiosity, the supplier relationship management journey will translate into a great deal of value added.”
Spending time on the segmentation process will help you to develop a deeper understanding of your customers, your business structure and your suppliers.