Supplier Relationship Management (SRM) has firmly become an area of interest for those looking to improve their supply chain management, but what are the truths relating to this all-important relationship? How can the relationship with suppliers be improved to benefit the whole supply chain?
These supply chain relationships are not always without difficulty, and most certainly have room for improvement. They are often some of the most complex relationships with a need to balance different wants, needs and desires. As Sara Ireton, Assistant Vice President with JPMorgan says “each party wants to maximize its time, resources and cash investment; these may be competing priorities that can strain the relationship.”
Here are the Paul Trudgian Top 5 Truths About Supplier Relationships in the Supply Chain:
1. The Relationship is All Important – Always
If you see the relationship as a by-product of your interactions with suppliers, then you will lose out on an incredibly powerful tool for your overall success and profit. If, through careful relationship management based on honest and timely communications, a listening attitude to their concerns, and a true desire to include them in the overall processes of the supply chain, then it will be possible to give your suppliers a vested partnership in your business.
2. The Best Supplier Relationships are Mutually Beneficial
When both parties get something, and benefit, from the relationships within the supply chain then the sum of the whole becomes greater than the individual parts. This synergy, brought about by each needing each other, makes for a more successful outcome for both parties. When there is benefit to both parties through the relationship then data and information sharing which will benefit both feels easier and more natural. Both parties also have a vested interest in protecting the data and information.
3. From the Best Relationships Collaboration Fuels Growth
When both parties realise the mutual benefits of the relationship then there is a natural compatibility which can only serve to boost the benefits further. Collaboration leads to the most successful buyer-seller relationships. If both parties in the supply chain can find common ground in their objectives they can team together to take advantage of opportunities for both parties giving them the competitive edge.
4. Technology Matters to Relationships
Technology can’t be excluded from its place in supplier relationships. Technology can make or break relationships. Your procurement software, spend analysis, performance management, and other technological processes all impact your supplier relationship either directly or indirectly. Technology can simplify the supplier relationship process.
5. Transparency and Trust are at the Core of Supplier Relationships
At the core of all successful supplier relationships is an ethos of transparency and trust whereby there is a mutual exchange of ideas and information to both problem-solve and better the partnership. Through careful relationship management and selection, you can place your trust wisely and work together to remove vulnerabilities in the supply chain.
Supplier Relationship Management shouldn’t just ‘happen’. Each relationship within the supply chain should be carefully handpicked and nurtured to ensure a supply chain which is both strong and agile, and able to thrive.