Supplier Preferencing
Understand how your suppliers rank you as a customer — and whether you’re getting the service your spend deserves.
Input Parameters
Customer Classification
The Relationship You Don’t Know About: How Suppliers Really See You
Every procurement team conducts supplier evaluations — scoring vendors on price, quality, delivery, and service. Almost no procurement team asks the inverse question: how does the supplier evaluate us? Where do we rank in their customer portfolio? Are we getting their best prices, best people, and first access to new products — or are we an afterthought? Supplier preferencing answers these questions, and the answers are often uncomfortable.
The Preferencing Model
The supplier preferencing framework, developed from the work of Steele and Court, maps suppliers on two dimensions: how attractive your business is to them (volume, growth, payment behaviour, reference value) and how important you consider their products to your operations. The interaction of these two assessments determines the quality of service, pricing, and attention you will receive, regardless of what your contract says.
The Four Supplier Perspectives
Core customers receive the supplier’s best: priority allocation during shortages, proactive innovation sharing, senior relationship managers, and genuine pricing flexibility. These customers are large, pay promptly, are growing, and are easy to work with. Development customers are attractive but seen as under-exploited — the supplier will invest resource to grow the relationship. Exploit customers are important to them but tolerated — they know you depend on them more than they depend on you, and pricing reflects it.
Nuisance customers are the most dangerous classification: low value to the supplier, high complexity, and low strategic attractiveness. These organisations get the newest, least experienced account managers, last-priority delivery slots, minimal pricing flexibility, and indifferent resolution of complaints. They are often unaware of their classification until a crisis exposes it.
Why Low Attractiveness Matters Even When You’re Important to Them
An organisation that represents significant spend but pays late, orders unpredictably, returns goods frequently, and makes unreasonable demands will be classified as ‘Exploit’ — and managed accordingly. The supplier will retain the business but extract maximum margin, resist innovation sharing, and be first to switch capacity to better customers when demand is constrained. Being a high-spend customer protects you from being dropped. It does not protect you from being deprioritised.
Improving Your Classification
Three levers move a customer from Nuisance or Exploit to Core: consolidating spend to increase relative importance, improving payment reliability to reduce administrative burden, and reducing transaction complexity through standardised orders. The highest-ROI improvement is almost always payment terms compliance — suppliers remember who pays on time and who doesn’t with remarkable precision.
Framework Origin
Four Classifications
Attractiveness Drivers
Spend volume, payment reliability, growth trajectory, reference/brand value, ordering predictability, and low-complexity account management. Difficult behaviours — late payment, excessive returns, last-minute changes — reduce attractiveness regardless of spend.
Key Insight
If you are classified ‘Exploit’ by a bottleneck supplier, you have a supply security risk that no contract can fully protect against. Improve attractiveness or qualify an alternative source — preferably both.