Suppliers are a key input to the value chain of all
organisations, whether it’s simply ensuring that you have an effective and
efficient IT system for your needs; or to offer the quality and timely supply
of key components and/or services that have an integrated impact on your
organisational performance, profitability and customer service. But how do you
choose the right supplier for your organisation? And what’s your approach to
reviewing your supplier’s performance?
Organisations that have been in operation for years
have often developed special, collaborative relationships with their key
suppliers where, although they are separate organisations, they work together
as if they were one, since they benefit from each other’s success, or at least
should do. The really smart organisations invite their key suppliers to be part
of their strategic planning processes, so that the supplier can start
identifying with the firms future vision and what they need to prepare/research
to help make it happen (and ensure they are part of it). Also the supplier can
often offer unique inputs and perspectives on their specific industry
environment and what the future might look like, which by default will impact
you and your products and/or services.
Strong supplier relationships have such significant
tangible and intangible value for both organisation and supplier that it’s
vital the executive teams from both sides never allow complacency to creep into
the relationship, as this can turn a solid relationship sour in a very short
period of time and once the relationship is ‘lost’ or one party has concerns
about the relationship, the strong collaborative partnership is unlikely ever
to be the same again and real value will be lost to both sides.
When starting out, or diversifying or opening a new
operation in a new region, finding the right suppliers takes time and is
something that an organisation should spend quality time researching, as
finding the right ‘fit’ will have a real impact on pricing, quality, logistics,
research, customer perceptions, profitability, sustainable growth and even your
organisational culture, as having suppliers you can trust and who can ‘add’ to
your strategic future are worth their weight in gold.
So in today’s fast paced global environment
suppliers should be an integral part of an organisations vision, strategy and
day-to-day business. The fact that you don’t own them doesn’t mean that you
should keep them at arm’s length, as they are a key extension of your business.
So it’s strange that some organisations seem to
treat their suppliers like second class citizens, people who should do as they
are told, go the extra mile at their own cost and be happy to get paid
‘sometime’, whenever that may be. To be blunt, regardless of your size, this
isn’t smart strategic thinking, as no one likes a bully and though the supplier
may seem to be whistling your tune, they are only doing it as part of their own
business strategy.
That’s not to say all suppliers are smart either,
where some are looking to make a fast buck or worse can’t be trusted with their
customers proprietary information, using it to try and increase their sales
with other competitors in the same industry.
Unfortunately many, in fact way too many business
leaders have become cynical of words like trust and collaboration, and prefer
an arm’s length relationship with suppliers, where they feel that they have the
power and it’s clear who’s in charge - but
by not developing collaborative relationships organisations and their suppliers
are leaving opportunities off the table, as neither trust each other enough to
look at ways of jointly adding real value to the current value chain and to
look at new and improved ways to offer real competitive advantage in the
future.
If you don’t have collaborative relationships with
your current supplier base, then it’s time to ask why not and spend the time
doing a complete supplier review. This is where you spend time looking at
identifying, researching and analysing local and international suppliers,
finding out what they do, what their business philosophy is, and meeting them
to assess how you ‘gel’ together and maybe giving two or three the opportunity
to supply you for a period of time, while you assess if these are the people
you can build a collaborative partnership with.
The successful companies of the future will be those
with strong collaborative supplier relationships – as it just makes good business
sense for all involved.