It pays to build a better relationship with your supply chain.
Outdated supplier management programs were based on power, with the business possessing all the leverage and the supplier none at all. The customer would cry “jump” and the suppliers would say “how high?”.
As with tie-dyed t-shirts and bell bottoms, there’s a good reason why such thinking should now be consigned to history.
Businesses are now beginning to understand that incentivizing suppliers to deliver short-term savings may produce instant payback, but this does not deliver any longer term value in terms of making a company more competitive in the market. Organizations should to look at suppliers’ long-term value as a strategic partner.
Suppliers are far more valuable when they have a seat the table and can share their views and opinions. As experts in their specialized area, they can teach your business how to improve performance and gain competitive advantages.
What’s important is how those opinions are aired, and what drives the agenda for discussions. This is particularly relevant if you have numerous suppliers covering different areas who have contradictory opinions. How do you know who is correct, or who will be able to provide you with a better service?
The answer lies in data provided by smart technology. Once suppliers understand your business objectives and the right data is shared with them, they can see exactly how they are impacting your operations. Data provides a single source of truth that removes time-wasting arguments.
Instead, it sets the scene for productive discussions where your suppliers can suggest improvements and innovations that are mutually beneficial. In this sense the power is completely balanced and both sides are happy. Your suppliers feel incentivized, while you get commercial gains such as improved speed to market, sales growth, and greater profitability.
Welcome to modern supplier management.