The Nature and Theoretical Roots of Supplier Experience
According to an ingrained saying, profit is made through effective purchasing. Traditionally this has meant tough buying practices in well-functioning supply markets. However, the much-praised market mechanism does not always, if ever, function as it is theoretically expected. This has been understood by managers as well as researchers and consultants for quite some time ago paving the way to a more relational, partnership-based purchasing philosophy. Relational and cooperative purchasing practices have actually made real business networks possible.
Networks as socio-psychological systems
Classical management theories treat organizations as socio-psychological systems. In a nutshell, it means that organizational performance is dependent on the socio-psychological conditions in an organization. Personnel motivation, commitment, empowerment, trust, work satisfaction etc. are well known organizational factors managers pay attention to nurture organizational effectivity and profit-making capability. The socio-psychological view also highlights the dialectical nature of individual employees’ feelings and organizations as working environments. In other words, the way people feel is dependent on the conditions in the work environment and vice versa.
In the era of networks and business ecosystems, one can not pay attention to intra-organizational conditions only. Networks must also be regarded as organizations with socio-psychological characteristics. It means that the human aspect must be taken into account when building effective and well-functioning business networks and supplier-customer relationships. From that point of view, supplier experience can be regarded as an important factor explaining supplier trust and commitment to a certain customer. By improving supplier experience in a relationship, an industrial customer starts a positive circle. Better supplier experience increases supplier’s commitment, which again results in positive actions towards the customer, which again, improve supplier’s performance in the eyes of the customer. All this improves customer satisfaction and trust in the supplier making a future commitment in this particular relationship stronger. Further, as the relationship atmosphere improves, the conduct of the supplier improves, making the positive circle of development occur. It is easy to understand how the opposite development leads to a vicious circle ending up with decreasing relationship-specific performance.
From employee experience to supplier experience
The literature on employee experience defines it through three elements: Organization culture, technology, and physical environment. Organization culture refers to organizational values, which set guidelines for anticipated behavior. Technology refers to the tools, today quite often digital ones, that personnel use in their work. The physical environment, again, refers mostly to the facilities and locations people are working in. Positive employee experience needs all these factors to be present in such a form which is favorable for a positive experience to occur.
A deeper explanation for employee experience comes from the psychological contract –theory. It approaches employee commitment from the perspective of the expectations. That is, employees evaluate the employer organizations promises against the daily practice they work in. If an employer’s promises are not met, the outcome is decreasing work motivation, weaker commitment and lower loyalty to the employer organization. There are two main types of elements by which psychological contracts are formed. The transactional type of promises refer to economic and money related matters like salary and other types of rewards. The relational promises refer to socio-emotional and relationship associated subjects like information transparency, mutual support and learning, development, and future prospects.
Analogously, supplier boundary personnel can have positive or negative experiences in a relationship with a certain customer in terms of culture as well as the technology the customer expects them to use in relationship interaction. Typically supplier boundary persons are salespeople, but in more integrated business relationships employees from various functions and organizational levels interact with partner firm’s representatives. Thus, when talking about supplier experience the object is not the supplier firm as such, but its boundary personnel getting experiences in the daily work within the customer’s supply chain management context.
Supplier experience as a boundary phenomenon
There are two important viewpoints to understand the nature of supplier experience (Figure 1). First, it can be approached from the point of view of transactional and relational promises/expectations that are explicitly or implicitly presented in the interaction between the parties. In this setting, the transactional elements refer to the economic factors as price-setting, exchange volumes, bonuses, sanctions, and, especially the promises/expectations of the win-win principle.
The relational elements can be divided into two dimensions: technological and cultural. The technological dimension is grounded in the socio-material perspective of work, which approaches work through the human/technology intertwinement. New technology enables new working practices, but without a practice renewal, new technology is worthless. This kind of problem may occur for example in a situation, where supplier personnel finds the customer’s supplier portal useless or difficult to use. The root cause for such a negative experience may be the fact that the portal does not serve mutual goal achievement, but only customer needs. It is also possible that both the technological application and the way it is used are poorly designed. The cultural aspect refers to the socio-psychological view highlighting the relationship between human behavior and the working context. In inter-organizational relationships, the promises linked to this are typically partnership –related. We have witnessed several cases, where customer highlights the importance of partnership type of relationships, but suppliers’ experiences in the daily work are not in line with the promised partnership related practices. Usually, the lack of transparency, commitment and loyalty, future orientation and relational atmosphere are the reasons why supplier experience on customer’s partnership promises are not met.
B-to-B relationships are not faceless firm-to-firm relationships, but socio-psychological environments, where different actors’ feelings and experiences have a crucial role in excellent relationship performance. The above discussion addressed the nature and theoretical basis for supplier experience. From the purchasing professionals’ perspective, paying attention, and improving supplier experience in terms of both transactional and relational dimensions, may pay off in the form of better supplier commitment and performance.
This text addressed only one side of the actors’ experiences in an inter-organizational context. The real situation is much more complex as well as interesting because in the boundary organization both supplier and customer experiences meet.
