Emotional Intelligence Can Improve Supplier Relationship Management

Great leaders tend to be collaborators who actively listen, understand unspoken messages and are empathetic when responding to another person’s point of view. These qualities, referred to as emotional intelligence (also known as emotional quotient, or EQ), are vital for relationship management.

Managing their emotions allows managers to focus fully on the other person, creating a dialogue that allows for identifying and overcoming challenges and delivering results. While most business conversations are thinly clad negotiations, EQ seeks to understand the underlying drivers.

Most references to EQ center on team dynamics, but EQ also is critical to supplier relationships, especially when it comes to developing and engaging diverse suppliers.

Adding EQ to Supplier Development Measures

Company-sponsored supplier development programs assist diverse businesses in competing for and winning contracts. The value is simple. Diverse suppliers increase their own profitability by winning more contracts while the company increases its diversity spend. In principle, it’s a win-win.

Supplier development programs traditionally begin by identifying gaps — and removing such barriers — as well as uncovering opportunities based on the diverse supplier’s capabilities. Adding EQ into the mix changes the focus from unrestricted growth to proper positioning by identifying each supplier’s unique edge.

EQ helps set aside unconscious bias and preset agendas. By actively listening, organizations can identify potential suppliers that could contribute innovative solutions. The ability to nurture suppliers depends on recognizing unspoken opportunities and potential pitfalls. This, coupled with business strategy, can create benefits for both parties.

Improving diverse supplier relationships requires both sides to invest time: Companies must develop a set of contract-qualified suppliers and suppliers must understand the business’s challenges and aspirations. It also requires parties to communicate, which can create transparency and a singular focus that generates organic growth opportunities.

Not establishing open, honest communication can hold back suppliers that appear to have all the “right stuff.” Managers who fail to provide clear and complete communication send mixed messages. For example, an organization may try to soften the blow when delivering bad news to a supplier. The supplier remains unaware the business feels it is lacking, continuing to believe it is delivering superior service.

Among the ways to close the communication gap and reduce confusion:

• Using metrics
• Reporting progress through periodic reviews
• Providing structured communication channels to align delivery, expectation and results.

Incentives and Other Considerations

Incentives can spark creativity and inspire suppliers to do more. They can telegraph a desired performance level, encouraging the supplier to innovate, showcase creative approaches. For example, a supplier that can deliver better quality can reduce customer complaints, which translates into cost savings — and more opportunity for the supplier to be noticed.

Other EQ considerations include:

Setting expectations. Take time to access what is best for both the company and the supplier. Positioning a supplier for expansion is flattering, but it is not always the best solution. First determine if the supplier’s operations are scalable. Actively listen, determining concerns and opportunities, hear what’s not being said. Review the supplier’s growth strategy to learn what has previously been a barrier and understand how the supplier manages risk. Then help the supplier set realistic expectations.

Managing the business is equally important. Help product owners understand what they should be asking for from their suppliers. Hear beyond the articulated business requirements and build collaborative relationships that convert knowledge and insights into business efficiencies and innovation. Consider introducing a relationship charter to extend beyond the contract.

Fact versus perception. With EQ, it’s critical to combine facts and observations with perceptions to build a well-rounded view of the supplier. Augment traditional supplier performance metrics with simple surveys to gather information and surface concerns. Ask internal colleagues who work with the supplier how likely they would be to refer the supplier to a friend. This will reveal potential unarticulated issues.

Supply managers should trust their instincts and remain open-minded. Some issues can be corrected by creating a mentoring relationship or through coaching. Mentorships are an effective way to address known delivery issues. Concerns related to leadership style and organizational effectiveness can be addressed with coaching.

Know the supplier. The key to impactful communication is using it effectively to access growth potential and creating the right supplier partnerships to deliver value. EQ enables organizations to see all sides — their company’s vision, the supplier’s ability to deliver and the perspective to step-back to access the fit. Improving communication is the first step to delivering exceptional results; it allows relationship managers to appreciate the uniqueness of each supplier and position each one to be successful.

(Image credit: Getty Images/Tomozina)