Infrastructure
Creating a supplier onboarding and retention strategy focused on high value customers
07 Apr 2020
Context- Client description: A leading steel fabrication services aggregator
- Opportunity: The client wanted to develop a strategy to strengthen its relationship with steel fabricators and onboard them on its platform to fulfill its production orders from EPC players.
As part of this client wanted to understand the following:
- Key requirements and pain points of its active and transactional suppliers and how to enable them to cater to increased orders from the client
- Requirements of suppliers who have not worked with it in the past and understand what will encourage them to get associated with it
Finally, the client wanted to obtain a framework to assess the feasibility of onboarding a supplier on its platform.
Our Approach
Our approach was to understand the attractiveness of suppliers and create a strong supplier strategy to onboard / retain strategic high-value suppliers. As a part of this process, we conducted an in-depth interview with >50 suppliers spread across multiple cities. The process was primarily divided into two broad steps:
1. Identifying requirements of different types of suppliers:
Mapped suppliers according to their production capacity and identified their key sources of orders
Further mapped them into active, transactional, and non-transacting suppliers according to the client’s order value catered to by these suppliers
Identified the pain points and key support elements which will enable active and transacting suppliers to cater to increased order value from
clients'
Identified the key reasons preventing non-transacting suppliers from partnering with the client to supply their products
2. Creating a focused strategy to retain high-value suppliers:
Developed a scorecard to identify the attractiveness of a supplier based on factors such as location, production capacity, capacity utilization, experience with digital players, etc., to segment high-potential and low-potential suppliers
For high-potential suppliers, identified broad partnership opportunities according to the market requirements and gaps identified in supplier interactions
Mapped the current supply chain for orders executed by suppliers for the client to understand leakages and estimated potential savings due to increase in number and spread of suppliers
Key Insights / Outcomes
Potential increase in profitability due to an increase in supplier base across different regions
Key gaps in offerings for small, medium, and large steel fabricators and how to address them
Praxis Value Delivered
- The client gained deep insights into the key requirements and gaps for steel fabricators
- The client obtained the framework to identify and onboard suppliers with high potential for a long-term partnership
- The client succeeded in improving its onboarding and retention of large steel fabricators by 15% and decrease its average procurement cost by 7% over 12 months
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