Attractiveness and leverage: reading the supplier preferencing matrix
Buyers spend a lot of time deciding how important a supplier is to them. It is just as useful to ask how important you are to the supplier.
Caveat Emptor1 min read
Key takeaways
- The supplier preferencing matrix looks at your account from the supplier's point of view.
- It combines the value of your business to them with how attractive your account is.
- Where you sit tells you how much leverage you really have, and how to change it.
Most purchasing tools look at suppliers through the buyer's eyes: how critical is this item, how risky is this market. The supplier preferencing matrix flips the view. It asks how the supplier sees you, which is often the better predictor of how they will behave in a negotiation or a crisis.
The two axes
- Value of the account: how much your business is worth to the supplier relative to their other customers.
- Attractiveness of the account: everything else that makes you appealing, such as paying on time, being easy to work with, offering growth or prestige.
The four positions
- Core: high value and highly attractive. The supplier will work hard to keep you.
- Development: attractive but not yet high value. The supplier sees potential and may invest in growing the relationship.
- Exploitable: high value but unattractive. The supplier wants your money but may charge a premium for the trouble.
- Nuisance: low value and unattractive. You will get minimal attention.
Leverage is not only about how much you spend. It is also about how easy you are to do business with.
Using it in practice
If a critical supplier sees you as a nuisance, no amount of hard bargaining will fix that. The better move is to become more attractive: consolidate spend, simplify your requirements, pay reliably, and share forecasts. Moving up the matrix changes the conversation before the negotiation even starts.