Maintaining better partnership relationships with your suppliers.
It is no secret that in order to succeed in business today, companies need to find reliable partners to help them deliver their value proposition in an agile, safe & cost-efficient way while maintaining high-quality standards. No matter the industry, oil & gas, hi-tech, aerospace, retail, fashion…this aspect always comes into play.
Finding your partners is a difficult task, however making sure they continue to be the best fit for you once onboarded is even harder, as companies often lose focus once the sales process has been completed.
How can you make sure you are consistently optimizing what you paid your suppliers for? How do you know which supplier you’ll be looking to keep and which you need to replace?
One of the best ways to do this is by measuring their performance and building a follow-up plan with defined timeframes to identify risk areas your business may be incurring when suppliers are not performing accordingly and holding them accountable to their offer on price, quality, and timeliness.
It is essential to keep in mind that this is not a one-way street; you should be prepared to support your partner to succeed, meaning that you are also accountable for setting up the ground for mutual success.
One example of this in a group mainly focused on material availability is by making sure your purchase orders are respecting agreed pricing & lead times; this way when measuring on-time delivery, both parties refer to the same the baseline and conditions for compliance, leaving no space to interpretation. If, by the contrary, these terms are not respected since the beginning, you may be setting up the whole program for failure.
So, by all means, treat your suppliers as a success factor in your company. This means, set clear and realistic expectations, verify the order fulfillment is being done accordingly, identify deviations, and drive corrective actions as a team rather than opposing forces. This way, you will be most likely to develop a healthy, lasting relationship with your suppliers.
If, after this, the results continue to be far from satisfactory, you may want to start looking at different sourcing, since you have already gave them the opportunity to develop with you.
Got too many actors involved? Don’t know how to measure them? Don’t know how or where to start? The following tips can help you develop your supplier development plan.
- Identify your ultimate objective: Is it price competition? Market leadership? On-time delivery?
- Spot the main risks that could affect or potentialize your objective.
- Focus on the areas & actors that may offer more risks or opportunities to your objective—led by volumes? Value? Service or material criticality?
- Set performance-oriented tools to reach your objectives, and prioritize them..
- Present your plan as a collaboration project rather than a mandate.
- Set a plan in motion.
- Repeat and adjust as necessary.
This blog post was edited by Ana Rosa Arana - firstname.lastname@example.org