The lure of “earned preferential treatment”

This is an excerpt of the original article. It was written for the March-April 2021 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2021

Last night, my wife and I shared a socially distanced bonfire with a few friends. One was a retired physician who is spearheading the vaccination effort in the small New Hampshire city where I live. New Hampshire has had its challenges getting needles into arms like everywhere else, but it seems as if we’re breaking through the log jam. For example, between week 1 and week 3, they’ve tripled the number of people they can vaccinate in a day, and they’ve expanded from five days a week to seven days a week. At least for now, there has not been a shortage of vaccines. I know there is a long way to go, but you can feel it picking up speed. Call me…

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There has always been something different, something attractive about the phrase “earned preferential treatment” (EPT). It implies that the buyer and their organization is treated differently—like a VIP. It implies perks and benefits not available to others. It implies strongly that the firm is important to the supplier and there exists goodwill and trust between the buyer and the supplier. Yet, a challenge facing most organizations is that of how to win this status.

Many organizations think that you gain this benefit by virtue of better transaction management—paying on time. Other equate EPT with the volume of business—the more that you buy, the more likely you are to gain EPT. The reality is that these views are both right—and both wrong. They are incomplete. They do understand that such a status is a prize that is gained by a process. At the heart of this process is an important issue: “Are you a good customer?” It is the position of this pape that you cannot earn EPT unless you are seen by your suppliers as being a good customer. However, as will discussed at the end of this paper, being a good customer, while important, is not enough by itself.

Earned preferential treatment

Here we will explore the concept of EPT by answering the following questions:

• What is EPT?
• Why is EPT even more important now than in the past?
• What does it mean to be a “good” customer?
• Is being a good customer enough?

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