The idea of supplier relationship management is a concept that has evolved greatly over the past few years. Managing suppliers used to be a transaction-based process. However, we have seen a shift – for the better – that involves treating suppliers as equal business partners.
Organizations are looking for suppliers that align with their core values and beliefs. It is no longer just about finding the cheapest and most convenient option. For example, companies big on environmental initiatives may prefer suppliers who operate similarly. Firms and their consumers view suppliers as an extension of the brand. As a result, suppliers are strategic business partners and work collaboratively to produce products and services.
There are a few ways that companies can foster this atmosphere of collaboration
Best Practices
One best practice used by many is having an open line of communication. As a partner, suppliers should be informed of any major operational shifts. Also, they should have the ability to voice any comments or concerns with their buyers. Having open communication is the starting point of an equal partnership. Furthermore, this creates an outlet for innovation. By empowering suppliers to voice concerns and share ideas, you are gaining insight you may not have been able to before.
After establishing open communication, you need to remember to use it! Listening to and collaborating with suppliers on ideas is crucial. This step is essential in aligning both organizations business goals, as “[studies] have found the top procurement teams that have successfully aligned with their key suppliers have improved supplier capabilities of innovation, quality, reliability and costs/price reductions and agility to reduce risk factors.” Also, communication and collaboration go hand-in-hand. Working with your suppliers towards one common goal can greatly help improve efficiency and boost profits for both parties.
At this point, you can move past a transactional relationship. Now, you have a strategic partnership. By using effective communication, you gain a reliable partner that you can work with in the long-term. Developing this relationship can help to reduce costs over time and mitigate many supply chain risks.
Having a strong supplier-buyer relationship can open new opportunities for both parties. As a result, both organizations become stronger when they work together in a collaborative way.
