Strategies for a successful supplier partnership

What exactly defines a successful supply chain partnership? Is it just your picking of suppliers that can supply material to you at a low cost, minimum lead time and long payment terms or it is just the beginning? These are couple of questions that play in our minds when we are trying to fix our supply chain for better efficiency, effectiveness and cost. We wanted to have a dig at the strategies that should be part of our program to improve our supplier partnership to make them more profitable for both the sides. The strategies that have changed over time and more so as an impact of the recently concluded recession, it has become clearer that squeezing the suppliers might not be the right strategy going forward as you run the risk of breaking your supply chain in case their financial viability is in danger. The strategies in our view should be:
  • First and foremost strategy is collaboration. As I keep on mentioning during conferences and my articles, today the supply chains compete instead or organizations and the efficiency of a supply chain can only be increased if all the stakeholders are collaborating, sharing knowledge and information and taking joint actions. This also improves the visibility within the supply chain and hence the issues can be fixed pro-actively
  • Try to resolve the problems not only at your end but at your partner’s (supplier or customer) end also. Please always remember that it is the partnership that will succeed and not just one of the partners
  • You can't rest on your laurels. Customers demand to see a plan for product development (especially in technology) so they know their future needs will be met. Similarly smaller suppliers look upto their customer organizations to help them plan their MRP with less volatility. These measures can reduce the costs at both ends and after-all both the partners will benefit and the probability of it becoming a far more successful customer supplier partnership will increase manifold
  • Customers have lot of expectations from their suppliers. Customers outsource to those who have the expertise, so they depend on vendors to implement, train, maintain and support the technologies and service provided. Support is almost as important as the technology or service itself. So it is important for the supplier to invest equally in support of services
  • Commitment is the key to a longstanding and fruitful relationship. Customers carefully monitor the leadership of their supply chain partners, their seriousness to groom the partnership and if the objectives of their organization finds any mention in the joint vision statement of their strategic vendors
  • The main driver for purchasing any new product, raw material, technology or service is cost savings, but the most the important financial measure is value in terms of increasing sales, production or other revenue-related metric. This should remain at the forefront of all the strategies and tactics
The crux of the matter is that the prime strategy for improving the success of a customer supplier partnership is to work together and win together instead of winning at the other’s expense.

1 comment:

  1. Couldnt agree more and I've seen an increase in the number of Supplier Relationship Improvement workshops I'm being requested to run in recent months with more on the way. This is not so one sided as it was in the past as I'm also being asked to do Client Relationship Improvement workshops at the bequest of the contractors who are increasingly seeking to engage the clients to consolidate the "partnership". I can supply outline details of these workshops on request.
    Most of the outputs are seeking alignment of expectations, improved planning and just plain simple open communications!!
    Cheers
    Dave

    dave.inglis@louisvilleconsult.co.uk

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