Here’s one more thing we can blame on the COVID-19 pandemic: the demise of customer service.  

Ask yourself, when was the last time you heard of a company working to improve their customer service? When did long call wait times become acceptable? How many automated menus do you have to navigate before you reach a live person? Have service levels declined at your long-term suppliers? Are companies aware of how bad their customer service is? 

Chief procurement officers are facing challenges from inflation, supply chain disruptions, changing regulatory and sustainability requirements, and fluctuating markets. They need supply chain partners who can help them address these challenges, not add to the list. 

The Current State of Customer Service 

Forrester tracks the U.S. Customer Experience Index, showing a continued decline since 2021. Consumer focused-companies, manufacturers, and government agencies — organizations across the board are failing to heed the warning signs. 

Zendesk research shows 73% of consumers say they would turn to a competitor after more than one bad experience. So why are procurement professionals putting up with repeat bad or underwhelming service? 

With pressures on the bottom line, suppliers are implementing cost-cutting measures on top of managing staffing challenges. This often results in automated or outsourced customer service systems that often fail to provide even basic levels of customer satisfaction. 

This approach may be a short-term win for your supplier’s bottom line, but is it likely not a win in terms of how procurement teams view their service levels. 

At some point, everyone has dealt with a frustrating customer service bot.  Procurement professionals can’t afford service friction from their suppliers when millions of dollars are on the line. 

The Role of Procurement in Combating Poor Service  

The cold hard truth is that some of this may be your fault. Procurement teams need to recognize their role in allowing service levels to fall, and to rethink how they approach their supplier relationships. This starts at the very beginning with negotiating supplier agreements. 

Too often, procurement organizations take a myopic approach to negotiations and fall into the trap of fixating on price alone.   

Reframing the negotiation phase as an opportunity to form a long-term relationship, built on win-win agreements, opens the door to better service and, ultimately, better value from your supplier. Service is a critical element of the value equation that is often overlooked. 

Inevitably, poor customer service will continue until procurement teams demand better service. Fortunately, procurement professionals have tools to demand better from suppliers. 

Clearly define customer service expectations. Setting your company's expectations for customer service levels is a critical step as you approach negotiations and plan your negotiation strategy.  

What service elements does your company need? The process of procuring materials and products generally involves very detailed specifications, inspection and test methods. However, the procurement of services, as well as the service related to a product, are often very less well defined. 

Clearly and specifically define the levels of service you expect, as an integrated part of a robust supplier agreement and long-term relationship that supports your business goals. Then clearly communicate these expectations to your suppliers frequently. 

Implement service level agreements (SLAs) to enable service level measurement. If you aren’t integrating service level agreements (SLAs) into your supplier agreements, you may be contributing to the perpetuation of mediocre service standards. Examine your procurement agreements closely. Do they include detailed SLAs that clearly address all your service and performance expectations? If yes, are they delivering the results you want? What are the gaps and performance issues? 

Drive service level improvements. Once you’ve defined what customer service levels your procurement team expects from suppliers, and have communicated those expectations to suppliers, implement detailed metrics and regular supplier performance reviews to drive improvement. 

Most suppliers will welcome and respond to detailed and objective performance feedback, when presented in a collaborative manner. 

Rethinking the Impact of Customer Service on Procurement 

It’s time to reframe how you approach customer service. Actions to improve the service levels of your suppliers won’t just improve service; they will improve the delivered value of your supplier relationships. 

The added bonus is that you’ll create a stronger, more resilient supply chain.  

There is an upside for your suppliers as well: With the service performance bar currently set low, suppliers that prioritize customer satisfaction can quickly gain an advantage over their competitors. 

Procurement leaders have a major role to play in raising service standards. It's time to expect (and demand) higher service levels from suppliers which will deliver more value for your company.  

Mike Slomke is a leader at RED BEAR Negotiation.