What the Duck?! Episode 7 Transcript
How to Get Suppliers to Adopt New Supply Chain Software with Daniel Lueck
Welcome to What the Duck?! – a podcast with real experts talking about real issues in direct spend supply chain. And now, here’s your host – SourceDay’s very own supply chain maven, Sarah Scudder. Thanks for joining me for the What the Duck?! Another Supply Chain Podcast brought to you by SourceDay. I’m your host, Sarah Scudder, and this is the podcast for people working in the direct materials part of the supply chain.
Today, I’m going to be joined by Dan Lueck, and we’re going to discuss how to get suppliers to adopt a new supply chain software. If you work for a company that is struggling to get your suppliers to adopt a new system, then this episode is for you.
I’m @SarahScudder on LinkedIn and @SScudder on Twitter. If you are new to the show, make sure to follow this podcast so you don’t miss any of our direct spend supply chain content.
Today, I’m excited to be joined by Dan Lueck. Dan is the strategic sourcing manager at Provisur Technologies. Provisuer manufactures food processing equipment. Dan oversees supplier capacity planning and is responsible for key performance indicators for fill rates, on-time deliveries, cost savings, quality, and inventory turns. Dan is known for his ability to get strong supplier adoption and usage when his supply chain team implements new software.
Welcome to the show, Dan.
So, how did you wind up in supply chain?
Well, my first job was in distribution, and I always liked to negotiate. I like the relationship working with suppliers and what they bring to the table. Getting more into supply chain, when I moved from distribution to manufacturing, I decided that it was time to get some certifications and kind of understand the whole realm of manufacturing. So, I went and got certified at Apex American Production Inventory Control Society and also received my CPM – Certified Purchasing Management degree. And you know, I have been working with suppliers for now over 35 years.
Why were you drawn specifically to manufacturing?
Well, distribution has its limitations. You don’t have as much interaction with the people on the floor and what you’re bringing to the table. I enjoy watching things being built. I enjoy seeing the end product and you know where that goes out in the market. I’ve been in telecommunications, other electronics, and finally at Provisur where we make food processing equipment. So, to me, that’s exciting being able to walk out on the floor and you know all the things that you’re bringing in and the things that you’re doing, and how it makes a difference with your company.
What does supplier relationship management mean to you?
Sarha, it means everything. That’s very important to have a good relationship with your suppliers. It’s a two-way street. I learn about their business and what it takes to run it, what the cost drivers are, capacity restraints, things that they’re struggling with, and I, in turn, relay my expectations and what we need on our side to make our company successful. So, bringing those things together and both of us learning about each other’s process, what we do, that’s key to success.
So, in prepping for this interview, Dan, you said something to me that really stood out. Why do you believe that a supplier should be a buyer’s most important stakeholder?
Well, I always tell my buyers, you’re actually more of a salesperson. The more that you can entice them and they want to be a supplier to your company, you know what do they have to look forward to? New products, new opportunities on their end. That’s what you’re selling. So, the more that they want to be a part of your business, the more they are going to put forward and try to be that key partner.
When selecting a new software, which I know your team has done many times throughout your 35-year career, what should you prioritize to help ensure you get good supplier adoption? And I want to highlight this because I think this is something that is often missed when companies are going out and assessing and looking at software. They’re looking often at the end-user experience but not the experience of the supplier.
Well, our adoption has been on all three sides, planning, buying, and the suppliers. I probably started talking about this to our key, you know, 25 suppliers six months before we were ready to roll out. I got them keyed into what this was going to do as far as our communication. We struggle with all the emails back and forth, back and forth, and trying to have one location where all of the information was housed, suppliers can go into it, buyers, planners, and we all have one place and not, you know, many emails. I remember talking to the buyers and asked them, I know you struggle with all the emails, what percentage is probably expediting and back and forth with suppliers? And they probably said about 75%. So, anyway that we can group that information together and put it all in one spot and you know, preparing them out of time, that’s keys to success. I also asked some of them if they’ve ever been on a different called a portal system communication like that, and many of them have, and when I asked them which ones, I had a few people that said SourceDay and that’s the best one they’ve been on. And when you were looking at this software solution option to help your suppliers minimize the amount of emails and manual work that they were doing.
What was your strategy? How did you go about that selection process?
Well, it was actually, you know, presented to me back in 2018 where the sales rep wanted to come in and show me his product. They actually sat down with my counterpart on materials management, and we did a SWOT analysis there, showing them what we do well, what we need to do better. And then they took a look at our whole dynamic and took our situation and showed us how it would fit into SourceDay. So, they listened to us. They also had a meeting with the buyers and planners when they later on presented the product to go through it and show them all the steps and what to expect going forward, get all their questions out front.
What does good supplier adoption mean to you?
And the reason I ask you this is when I was prepping for our interview, some of your peers describe you as the ‘supplier whisperer’ or somebody who just excels at getting suppliers to adopt and using a new system, which is something that’s very challenging for a lot of people.
Yeah, one of the things that, you know, I’ve heard before is partnership and respect and both of us growing and getting better. So, you know, some of the things that I’ve adopted back in 2015 were scorecards actually back in the mid-1995 to 2000 doing scorecards, more on a manual process. Then I put that in place at Provisur about 2015, where the first thing we looked at was how do we track our on-time, then the next one was quality, and a lot of the other metrics were more subjective. You know how well do they interact with engineers, communicate back to you, acknowledgements, and so on.
What I liked about SourceDay is that my goal is to take those things that were done on other programs and the live version that we can do where everyone can see it. The buyer can see it, the supplier can see exactly where they’re scoring. We have quarterly reviews with our suppliers. We set the expectations, and then at the end of the year, first of the year, we have a formal year in review where we go through their scorecard. It shouldn’t be a surprise on how they’re doing and what we expect, and what our goals are, and that’s when we set the goals for the next year if we wanted to go from 95 on-time, and maybe the next year it’s 96. We’re shooting for 98. We’ve been very close to that, and with the things that have changed with the pandemic and the supply chain, I think we’re down to probably around 94 now, so we got to get that back up. It’s difficult, but they know that that’s what we expect, that’s what they know we need.
And I was talking to a supplier the other day, and they said, ‘You know, we really appreciate what you’ve done to make us a better company,’ and that means a lot. You know, we’re both trying to make each other better at what we do.
Why is getting suppliers to adopt a new software solution so difficult?
“Well, you’ve got some suppliers that have been with us 20, 30, 40 years. We have some that have moved along with time and embrace change and like to see things more efficient, a better way of doing things. And we have some that, you know, like everyone, they’re used to their old ways. They don’t want to learn it; it takes too long. But we work through those. Most of them want to make a difference; they want to do a good job. And your company does an excellent job of onboarding, answering their questions. The things that I liked were the videos that you have available to them to look at the step-by-step process that they can look up and see how to do things. They’ve got the live chat, and then they’ve got email support. It’s all there at their fingertips, and your training people are very good, where if they want a special Zoom conference to go over their particular problems, they’ve been more than happy to jump in and do that. So, you know, trying to take away the excuses. It may not have been the best time to start out an ad SourceDay because of this supply chain issue, things going out from six weeks to six months and so on and further. So, a lot of people struggle, and they’re always firefighting. But we want to get away from firefighting and go forward and be proactive. And the way to do that is, you know, through software companies like yourself, anything where we can minimize the time we spend doing it.
So, you successfully rolled out RPO collaboration software, and one of the reasons it’s been so successful is your ability to get supplier adoption, even getting suppliers complimenting and thanking you for rolling out our software. We have buyers that are listening to this that are really, really struggling potentially with rolling out some sort of new supply chain software because they’re not able to get their suppliers to adopt, and they’re getting pushback. Can you walk me through the steps that a buyer should take from start to finish as they’re going through this process of trying to train, onboard, and get suppliers to use a new system?
“Well, it benefits everyone, not just on our side but also their side. So, PO acknowledgments, for one thing, we never had a way of tracking if they got the PO. Did they accept it? Did they look at the dates, the descriptions, the pricing, everything that should be involved in that? So, what we would do is once a week, we would send out an open order report to them. They would have to manually go through that and look at it, making sure that there wasn’t a glitch, that they didn’t miss a PO, that we all matched together, that we were on the same page, that if they show they shipped it complete, that it was off of there. If they show that they shipped half of it and we didn’t see that, we go through the discrepancies. But, showing them how we can do it, and they can be on this portal anytime they want, they get all the open orders. They all go to them automatically, and we can see when they acknowledge and when they look at it, and they can send us back any kind of changes. No, I can’t meet that date; that price is different, and we can get those resolved right away.
We don’t, you know, waste time with emails going back and forth and then having to go into our system to change them. If we accept the date, we accept it and it changes it, and it automatically changes our system every 15 minutes. Same thing with the pricing. It goes over to the buyer. If he accepts it, it will change the PO and get changed in our system, and if they don’t, then they can make the comments back and so on, but we have all that interaction right there and we see what their responses have been. Where before, you would have to dig through emails and just kind of showing on in reality that yes, you have to learn something new, it’s not difficult, it’s very intuitive. Like I said, people praised how easy SourceDay was, and I had another one that he’s like, he’s our rock star, and he loves it. He’s like, I would never go back. So using that to tell the other people who don’t want to adapt it, what’s keeping you back? Asking the questions, resolve their issues one by one.
How do you overcome or how did you overcome objections at the very beginning before suppliers had a chance to actually use the software that said, “you know, we’re not going to use this, no way, we’re not, we have no interest in using a new system?”
That’s a good question because I really haven’t had anybody that says no, we won’t do it. Yes, there are some that have five and six different portals that they work with. There are some where maybe this is the first one, but it is an easy thing to do. There’s got to be a legitimate reason why they say no, and I’m not sure what that legitimate reason could be because it benefits both sides, and we need to be able to communicate if they’re going to supply to us and they’re a partner, and we need to have that relationship where we both agree on what their expectations are. If I want acknowledgements 24 to 48 hours, then that’s what our company needs. If we need them to update date requests within 24 hours, then that’s what we need. If I want to measure our on-time delivery, and that’s a key goal for us, then it’s a key goal for them.
One of the other things that’s been important to your success is the data and metrics piece. What supplier adoption metric should a buyer track?
Well, like I said, the first thing that I always started out with was on-time. That’s key. You’ve got to have good dates, especially these days. I don’t want to see any kind of lights on the report, and I can see that when I go to the SourceDay dashboard. The next to me is quality. It’s got to come in if it gets rejected and I could take time to send it back. I measure all kinds of quality. I measure the quality of the POs, and my buyers are responsible for 100% accuracy, and so is the supplier. The packing slip’s got to be 100% accurate, the invoice has got to be accurate, and we have to have that three-way match in order to get paid. So obviously their incentive is to get it right the first time. After that, responsiveness which now I can have an exact measurement through SourceDay, so the responsiveness to the acknowledgements and also to their updates. To me, that’s very important. The next one that working on with SourceDay is we will be measuring their purchase price variance. Another key indicator, obviously people roll standards typically once a year, and there are changes especially in this day and age where we used to be able to you know minimize that increase or try to do cost avoidance and get those, you know, orders to be accepted further out than what they want it to be. So. those are some of the the key things that we want to make sure we measure.
What about from a supplier perspective?
What data or metrics are important for them? Have you seen or heard any asks that really stood out to you, the metrics that they’re prioritizing? They would obviously, you know, like to do more contracts, blankets, vendor-managed inventory, auto-replenish. And by doing that, what we try to do is, as I mentioned, we need to get into their facilities and understand their business. So if a buyer or buyer planner is giving them all these small orders, you know, continually, that becomes a lot more work. Better to negotiate it and put things up front, allowing them to plan their system and be more effective and efficient the way they run. So you know, you have to know their side, and they need to know your side in order to work out your programs and ways of filling that supply chain and having a pipeline that makes sense. We do that a lot.
What’s your favorite supplier adoption success story?
We have a metal fabricator who is our top one. I’ve actually got two. One as a distributor, but the first one, a metal fabricator, they actually used and really adopted and dug into the training of SourceDay, and they now export the information into their, I’ll call it their ERP system. And now, when I go through their facilities, and they’ve got these schedules on each part of their process to make something, they can take our information, put it in there, and if we mark hot on a SourceDay item, it shows up now as hot on their boards right in front of their workstations. So that was very good, and that’s the one that said, “You’ve made us a better supplier.” So you know, that’s what it’s all about, and the other one was the distributor who we set up a customer safety stock program, and you know, that has been very efficient as a pull system coming out of theirs and managing that, but he loves to be able to communicate right through that system and get the updates done. And they, I get a lot of suppliers that look at those metrics and don’t question. You know, I know that that was received on Monday, and your results show you didn’t put it in until Wednesday, and they don’t want to get dinged. The more they see that scorecard, the more they want to do the right thing and get better.
If people want to check you out, where do you want to send them? They can find me on LinkedIn. I am there, and any questions they have, they can ask to join, and I’ll be glad to answer their questions. Thanks for discussing how to get suppliers to adopt new supply chain software with us today, Dan, and in particular, sharing your experience using our PO collaboration software and how you’ve been so successful in getting supplier adoption. If you’ve missed anything, you can check out the show notes. If you are new to the show, make sure to follow this podcast so you don’t miss any of our direct fun supply chain content. I’m @SarahScudder on LinkedIn and @SScudder on Twitter. This brings us to yet another episode of What the Duck?! Another Supply Chain Podcast. I’m your host Sarah Scudder, and we’ll be back next week.