What kind of relationship do you have with your supplier? developing good supplier relationships for acquisitions librarians Annette Hugill, Vendor Relationships Team Leader, Auckland City Libraries Andrew Hocken, International Sales Director Baker & Taylor: Australia & New Zealand Abstract A well-managed relationship with your supplier is a key part of good acquisitions processes. This paper focuses on how libraries can develop and maintain a healthy relationship with their main suppliers and how suppliers can build on their relationships with their library customers. Auckland City Libraries Vendor Relationships Team Leader and the Australian-based International Sales Manager from Baker & Taylor, one of the world s largest library suppliers, present their experiences and words of wisdom. The total cost of ownership is a concept unfamiliar to many as we struggle with tight budgets and the need to get the best value for our dollar. However, the cost of dealing with a supplier can be a huge unaccounted cost to a library if the supplier does not have a good understanding of what the library requires and the library is not clear what their expectations are of a supplier. This paper describes the success factors in the relationship between Auckland City Libraries and Baker & Taylor. Key elements are ongoing performance measurement and analysis, and positive professional communication. We will look at what can go wrong when libraries and suppliers are not working together and what can be done to fix it. This paper will touch on procurement processes, but the focus is on how you work together once you have chosen your supplier. Keywords: procurement acquisitions collection management suppliers vendors purchasing INTRODUCTION This paper discusses what we have learned about supplier relationships in our roles managing acquisitions and supplier relationships in a large New Zealand public library and Australian state library, and as Sales Director of a large international library supply company. Most of this information will apply to all types of libraries and all types of suppliers. The views expressed in this paper are our own personal views and not necessarily those of our employers. Librarians purchase collection materials from a wide range of suppliers and in an ever-increasing range of formats. A well-managed relationship with your supplier is an important factor in the acquisitions process. This may be a one-off purchase to a longer term fully managed relationship or even a partnership. Library suppliers with their websites and access to a wide range of material, publishers sales representatives with their catalogues and samples of recent publications, Internet sites, the local bookshop, and unsolicited callers that turn up at your library hoping that you will purchase the book they have just published are all sources for acquiring material for your library collections. Some of you will use all of these types of vendors, some purchase only from library suppliers, others a mixture. It may depend on your organisational procurement strategy. A key factor in supplier relationships is to make a conscious decision about what kind of relationship you are going to have with a supplier. This will often depend on how often a library uses a supplier and the level of expenditure. On the relationship continuum you may have a one night stand for a short-term relationship where your library may purchase once or occasionally from a supplier and at the other end of the spectrum is a marriage or partnership, which is a long-term relationship with a supplier often involving more than just the straight purchase of goods and service. Most good longterm relationships between libraries and their suppliers are managed relationships and these take time to develop. Auckland City Libraries and Baker & Taylor have a long-term managed relationship based on a clear understanding of each organisation and with a strategic outlook. TOTAL COST OF OWNERSHIP The total cost of acquiring library materials is often overlooked by libraries as they endeavour to pay the cheapest price or get the best deal for their books but it is an important factor when considering a supplier. It is very easy to be lured by the price of a book and forget about the hidden costs. This is known as the total cost of ownership.
Many of you will be aware of the costs of making the book shelf-ready be it in-house or as a value added service from a library supplier. However there are hidden costs, including administrative costs - the cost of making the selection decision, which may include the time taken with a sales rep, the ordering process, the time taken to chase up orders, the cost of processing the supplier s invoices each month, credits to be processed, the cost to the accounts payable division of your organisation. We are all familiar with the supplier that is always sending incorrect invoices, the follow-up credits to correct the error, and the time taken to e-mail and phone the supplier. These are all costs we need to be aware of when looking at our procurement strategies and making decisions about how to purchase and from how many suppliers. There will a low cost to dealing with some suppliers, a higher cost with others. There are no doubt libraries that are costly for suppliers to deal with too, for example, those who are consistently late with their payments. SELECTING A SUPPLIER A library supplier acts as a go-between or one stop shop for the library to order collection resources from a large range of publishers and distributors (local and overseas) and may also provide a wide range of value added services. They have websites listing titles that can be obtained and online ordering facilities; some have online customer services such as order tracking and interfaces with library management systems. A library supplier may specialise in a particular format or type of material, for example, large print and audio books, book in other languages, academic books. The selection of a supplier may be a simple and quick decision or a more lengthy process. Larger organisations will have procurement policies they must follow, and this may include tendering for the supply of library materials. This usually depends on the level of expenditure or size of business. Make sure you know what your policy is before entering into a relationship with a supplier, particularly an on-going relationship. Official tender processes such as a request for proposals are the most common procurement strategy to establish long-term purchase arrangements with suppliers, usually library suppliers. Suppliers are sent an RFP with questions/list of requirements that must be fulfilled. Responses are scored and suppliers are shortlisted or selected. Interviews are often done with shortlisted suppliers. Contracts are negotiated and a written agreement/contract in place. This process usually takes several months. The library must be clear about what is required from the potential suppliers and the suppliers must be transparent about what they can do. Why have a contract with a supplier? Whether or not you have a formal written contract with a supplier will depend on your organisational requirements and procurement policy. If you are entering into a long-term relationship with a supplier over several years or trialling a supplier a contract will enable you both to be very clear about what is required and there can be agreed performance measures. DEVELOPING THE RELATIONSHIP First of all find out what your supplier can do. Ensure your supplier knows what is important to your business and also why it is important, for example, range of material or supply times, ensuring you know about new books prior to publication so that you can place an order early to be sure of getting your copies. It is important to ask a supplier what you want to know. Is your supplier able to provide the goods and services that are important to you and at the level you require? Get to know your supplier and let them get to know you. You may even be able to visit your supplier and see how they operate see the size, the processes, and meet the staff. It does make a difference when you can put a face to the people who process your books and the person in accounts. From the supplier side, make regular visits to your customers and get to know them. Do not assume that all libraries are alike. We can assure you that not all libraries are the same. In addition, school libraries and public and academic libraries are all quite different with a different customer base, different organisational structures, and often, different needs from a supplier. The key to the relationship is communication. When you have been doing business with your supplier for a while and know them better, bounce ideas off each other. Make use of what your suppliers know and do not hesitate to ask them for advice. Often they can give suggestions or help on all manner of things. Remember, they have many customers and see many different ways of doing things. For example, it can be useful to discuss the options for the processing of books or other types of material with your supplier. Two suppliers have
recently told me how they help libraries. One specialised supplier works with school libraries to help them display and promote material better to their students, and this is all publications, not just theirs. Auckland City Libraries talked to a UK-based supplier about tattle tape in junior books. As a result of finding out what public libraries in the UK do, Auckland City Libraries no longer tattle tapes picture books, resulting in a cost savings. The supplier lost a piece of work (placing the tattle tape in the picture books) but the sharing of information was far more important to the relationship. If you need a service performed by a supplier, you may be able to help them set it up, for example book processing. Be realistic about your expectations of a supplier - do not expect them to do everything you do in your library. Small suppliers have a greater flexibility to personalise services than larger suppliers. Library suppliers can provide services that publishers cannot provide. If your supplier has a database, make sure you have a good understanding of how to use it, how it is kept up to date, what is on it, where titles are sourced. If necessary, get training from your supplier. If you are going to give a suppler a large piece of work, particularly a small supplier, for example, a huge order for something with a deadline, talk to them about it first and work together. A big order prior to the end of the financial year will have impacts for suppliers and their own resources. Ensure your suppliers are paid accurately and on time, and do check the monthly statements. Delaying payment by only one month will see you supplier lose around 1% off their gross profit. Librarians need to have a relationship with their finance department to understand the payment process. COMMUNICATION Talking to other libraries about their experience with a supplier can be invaluable. It will help you know the benefits and any pitfalls that may be encountered. Always be honest when sharing information with other libraries but do respect confidentiality, for example, around pricing structure, as not all libraries will be offered the same deal. Most librarians are happy to share their knowledge with other libraries. Do tell your supplier when they are do something right, for example, thank them for getting an urgent order though quickly. We all need a pat on the back. One of the big things around communication is to admit mistakes and apologise if you get something wrong. This keeps the relationship on a sound footing. If things do go wrong, document it if it isn t documented it didn t happen. You will often need to refer back to that documentation. Ensure your documentation is factual. Very importantly, tell your supplier when it happens not later on. You can then work together to fix it. Telling a supplier three months down the track, or even several days later, is not helpful and can create a bigger problem. In addition, it does not give the supplier the opportunity to find out what is happening and sort it out early. Obviously, they do not need to know about one-off trivial things. If you have a long-term relationship with your supplier, meet with them regularly to talk about how things are going. Find out what the future plans are for each other s businesses, what direction they are heading in, for example, electronic resources, website development, library funding cuts, outsourcing of cataloguing. We have all come across suppliers (and libraries) that do not meet our expectations for whatever reason and we do not want to do business with them. Suppliers should not assume they understand their customer s business or that all libraries are the same or even similar we aren t. We all serve a diverse customer base, even within our own libraries. Many of us also work in a political environment. It is not a good idea to tell your customers what they want, instead ask how you can help them. Do offer suggestions. For example, not all libraries want or need value added services and when we do, we all need different things. Yes, we all want our barcodes in a different place. A point to remember is that librarians do talk to each other, so don t make claims about your library customers unless they are true, for example the amount of business you may do with a library. Because suppliers work in sales, and libraries are more service focussed, a strong sales pitch from a new or even an existing supplier can be off-putting to libraries and cost a supplier business. We all get publishers and authors contacting us hoping to do business. Do not make it hard for them. You are not obliged to purchase from every supplier or publisher that approaches your library. If it the visit from a supplier is likely to be lengthy, make an appointment. Find out what the supplier does and be honest about whether or not you can engage in any business with them.
Market awareness of who is out there is just as important as who you are currently purchasing from. For those many unsolicited suppliers, often authors, listen to what they want and tell them how you would wish to purchase their item be it direct or through your own supplier. That way you are helping both the person approaching you and the supplier with which you may already have an established procurement relationship. Excellent, professional communication that delivers the message appropriately is the key to a good relationship with your suppler and vice versa with your customer. Always be polite, but firm if necessary. Do ensure that you use correct grammar and spelling in all written communication. There should be no shouting in e-mails (or verbally). From a sales perspective, the customer is always right, but sales representatives are human and in many instances, some of the problems you are encountering with a supplier may not be their fault. Remember that whenever you are communicating with a supplier or library, you are representing your organisation. Do keep a written record of communication, not so much for the little things, but for when you have discussed or queried something, for missing books etc. It means you have a record of the history of your communication, especially if a problem does arise, or if something needs to be escalated. SUPPLIER PERFORMANCE Managing supplier performance is an aspect of supplier relationships that is an often ignored or put into the too hard basket. How do you know if your supplier is performing well, badly, or even doing what you want them to do? If you have a contract with your supplier, it is a good idea to have performance measures. Even if you do not have a formal contract, you can still measure how your suppliers are doing. What you measure depends on what is important to you and maybe your customer service. Examples are supply times, accuracy of invoices, range of material. Keep it simple when it comes to how you measure. Make use of the data stored on your library management system. Check deliveries weekly or one delivery a month or whatever works for you. Excel spreadsheets are a simple but great way to store data as they can be easily manipulated for your needs. The best way is to take sample measurements over time to create an accurate picture but that does not mean you do not let your supplier know at the time if things are not working well. IF THINGS GO WRONG In any procurement strategy, things can go wrong occasionally or even frequently. No doubt, we have all experienced this. Agreed performance measures not met, poor supply times, incorrect orders supplied, or orders not supplied at all are all issues we have come across. With some suppliers, there may be ongoing issues and problems. This is where the total cost of dealing with a supplier becomes very apparent. Customer service is often compromised. When the same things continually go wrong, it indicates there is a bigger problem. It may be necessary to put into practice escalation procedures to remedy the situation be it large or small. Usually written contracts have agreed escalation processes in place, which can make the whole process more straightforward. When things do go wrong, talk about what is going wrong and do it professionally. No matter how frustrated you may feel, stick to the facts and explain the impacts of what is not going well. Everything should be in writing, including the follow-up of any phone calls with an e-mail. Document and date everything. It is often wise to have an agreed timeframe for resolution of the problem. There will be times when the best solution may not necessarily be the one you would really like. Do acknowledge to each other when the issue is resolved. What do you do when things go really badly wrong? Stop using the supplier. Tell them why and make sure it is the right person that is told. You probably will not be the first person to deliver the message you have. Honesty is the best policy and suppliers would hopefully respect what they have heard and be willing to do something about it. If you have a written contract or if your organisation requires it, invoke dispute settlement procedures. Hopefully things don t get this far. The most important thing that we so often hear, but should not be underestimated, is communicate, communicate, communicate. AUCKLAND CITY LIBRARIES AND BAKER & TAYLOR - A CASE STUDY Auckland City Libraries and Baker & Taylor have a very successful managed relationship that works well for both organisations. Auckland City Libraries and Baker & Taylor have been working together for over fifteen years. Our organisations have moved from a trading relationship where Auckland City Libraries purchased books from Baker & Taylor to an excellent long-term managed relationship, which
is more like a partnership. We understand each other s business which makes a big difference. Auckland City Libraries makes full use of Baker & Taylor online selection facilities, standing order plans, integration with library management systems and shelf ready processing. Baker & Taylor have been working together closely for 10 years, and, in 2006 Auckland City Libraries negotiated a supplier agreement with Baker & Taylor. Andrew Hocken, Baker & Taylor s International Sales Manager for the region, and Annette Hugill, Vendor Relationships Team Leader at Auckland City Libraries have worked hard to develop the excellent relationship that we have. Andrew has visited Auckland City Libraries central library and several of the community libraries to see the collections and understand the diverse populations served. He knows all the staff who select the material for Auckland City Libraries collections, the acquisitions team and most of technical services staff as well as key management staff. As Vendor Relationships Team Leader, Annette Hugill has yet to visit Baker & Taylor! Our relationship is based on trust Auckland City Libraries accepts and trusts what Baker & Taylor can and cannot do. We see the relationship as a long-term one. Our contract fulfils Auckland City Council contract requirements but is not a generic contract that could also be for roading material or car tyres. It clearly lays out what is expected of the supplier and the customer, but is not unrealistic. It contains key performance measures e.g. supply times, standing orders. This is a jointly negotiated contract, not one-sided. We each respect organisational confidentiality, including other procurement relationships. Our communication is open and honest at all times and totally professional. We ensure we meet agreed turnaround times for communication. Auckland City Libraries does not make unrealistic demands on Baker & Taylor and when we have asked for something that is not possible Baker & Taylor has been honest to say no, and also to explain why. This is how a good relationship works. Yes, Auckland City Libraries pays Baker & Taylor s invoices accurately and on time. When things go wrong we get onto it straight away, for example when Auckland City Libraries had problems with partial shipments and packaging. This involved some ongoing discussion with Baker & Taylor that was resolved in a satisfactory manner for Auckland City Libraries and it turns out, for other customers of Baker & Taylor. Baker & Taylor understands when things may have impacts on the service to Auckland City Libraries customers. We meet every six months in Auckland to discuss supplier and customer performance and also to share information about our organisations and Auckland City Libraries collections. Our relationship has a strategic vision as well as an operational structure. We discuss where our organisations are headed and impacts it may have. We are happy to share information and bounce ideas off each other. Auckland City Libraries accepts that as a big supplier, Baker & Taylor does not have the flexibility of a small supplier nor the ability to tailor services or processes, but we have made sure the relationship works for us both. What kind of relationship do you have with your supplier is a question worth asking at your library as well as what kind of relationship is the best one for your organisation. Clear procurement strategies often make this easier to answer. We hope that whatever kind of relationship you have, the information we have shared with you will assist you in the process of developing that relationship. Annette Hugill Andrew Hocken annette.hugill@aucklandcity.govt.nz ahocken@ybp.com