Supplier Relationship Management - SMEs
Posted on 20th November 2020 at 19:13
In Buyer-supplier partnerships, the SME generally maintain an arms-length relationship because they cannot see the benefits. This can hamper the good communication and trust needed to bring about long-term value to both the supply chain and organisation.
To create the best supplier relationship possible, procurement should consider applying great communication, responsibility and trust to reinforce supplier relationships.
Here are some tips for improving relationships with your suppliers:
Select the right supplier
The days of selecting vendors on cost alone are over. There are several other considerations like Sustainability, Ethical CSR policies, Financial Stability, Terms of Business, Customer Service and one that is often overlooked is the social fit between the organisations.
Get internal buy-in
Procurement can put a lot of time & effort into a formal ITT program, only to find that internal support for the change has not been accepted. The primary reason I see engagements fail is a lack of backing from departments that rely on an effective link, such as design or R&D. If like above the social fit is not right, the stake holders could end up abandoning the supplier after the contract is signed, leaving them to implement and manage their services without giving any direction on client needs.
Put key expectations in writing
Ensure the appropriate service levels and metrics are added into agreements. Time & time again we see cases of the relationship failing because assumptions are made at contract award but not explicitly written and accepted by both parties, then when one feels let down the relationship can sour.
Involve suppliers in strategic discussions
If a vendor supplies a key part or service to your operation, invite that vendor to strategic meetings, they are highly skilled and have a track record of manufacturing or delivering as well so may be able to provide opportunities to reduce costs by adjusting designs or changing the process.
Evaluate suppliers’ performance regularly
Suppliers and vendors play a key role in your company's success. Having a formalised system in place to track and evaluate supplier and vendor performance is essential to the smooth operation and profitability of your company. Successful SRM Programmes embrace their suppliers and vendors, viewing them as partners in helping to grow the business. This key information can also serve the basis for supplier negotiation in terms of pricing.
Treat suppliers with respect
I see many individuals/organisations in charge of procurement have the mindset that vendors should regularly bend over backwards, often to unreasonable extents by accepting late invoice payments, providing quicker than lead time deliveries or offering cheaper prices with little opportunity for the vendor to make a margin.
You never know when you might really need your vendors and based on your treatment of them, do not get you the response needed to get you through!
How We can help
Pro-Outsourcing are able to provide Procurement & Supply chain as a service to help your supplier relationship management, as well as implement risk mitigation strategies and steps to identify risks before they turn into business affecting problems.
Tagged as: adversarial, arms-length, procurement, purchasing, relationship, srm, supplier selection, supply chain
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