At ConnXus, we’ve worked with countless organizations. From companies big and small, one of the biggest opportunities we’ve observed is managing multi-tier suppliers. Collaboration between buyer and supplier is the key to business growth. Successful SRM (Supplier Relationship Management) maximizes the value of your supply chain.
The act of sourcing changes a firm’s supply chain network and often adds complexity. Multi-tier supplier management systems involve complex decisions and require smart solutions that span the procurement process. In this environment, firms must learn to cope with the uncertainties and disruptions of a global supply chain. This requires a paradigm shift, one that challenges the traditional view of procurement–from a cost reduction function to a strategic, value-add, and risk-mitigating function.
To truly embrace a collaborative supply chain, buyer-supplier relationships must be symbiotic. Buyers help develop and create the supplier’s business opportunities, while suppliers provide high value and innovation in return. Trust runs both ways. Building a sustainable relationship with your suppliers requires a regular cadence of business rapport. For example, paying your suppliers on time reinforces their own business continuity and allows them to focus on market innovation. If you delay payments, this may affect your suppliers’ ability to pay their primes and harm your downstream supply chain. An organization’s supply chain network strikes a fine balance that can be disrupted from any direction. Doing your part ultimately provides competitive value for your business and brand.
Think about incorporating a feedback loop within supplier relationship management, and make sure everyone is held to the same standards. This will drive supplier engagement and bring in new ideas that provide more value creation within your supply chain. Bring diverse stakeholders to the table, to improve your overall procurement process. Let your category managers and IT department communicate with suppliers to bridge gaps within your supply chain.
Reviewing suppliers and getting their feedback improves your sourcing. The impact of engagement also determines long term sustainability and risk to your supply chain. Developing relationships with your suppliers can help foster collaboration, drive innovation, and impact your bottom line. What makes you different from your competitors? Together with your suppliers, the story of your procurement spend and impact can be told in a way that gives you a competitive market edge. By evaluating and communicating with suppliers, firms can reduce harmful practices and strengthen partnerships that take advantage of a supplier’s nimbleness and innovation.