About the Author:
Moses has over 17 years experience managing strategic supplier relationships in large corporates and SMEs. With portfolios in excess of £200M he shares below his approach to enabling the strategic element in key supplier relationships.
In my last article I provided a 6-step process of how to implement Strategic Supplier Relationship Management in an organisation. Thank you all again for your feedback and comments. Glad you found it useful.
Assuming you have implemented successfully the core of SRM, you should have already seen benefits such as cost savings, adherence to service levels, structured managements of the contract and delivery of services and hopefully a positive relationship with the supplier. You have, also, now taken the 6-steps to establishing a strategic relationship with your Tier 1 supplier and here are some of the benefits you can expect to see throughout the term of the relationship.
Firstly, you need to ensure that the mindset on the relationship is less transactional and adversarial and that you have moved from a cost-base to a value-base relationship.
Secondly, start by collaborating as much as you can on things like forecasting, planning and capacity management. This level of interaction will enable you to identify opportunities way in advance, opening up the path for mitigating risk and strengthening the supply chain. When working in collaboration with your supplier to plan for the immediate future, you enable them to plan internally better and thus you should be benefiting of this in practical terms. Ensuring, the right resources are in place well in advance you could also be looking at improved delivery of Service Levels. Just to be clear I am not suggesting that the supplier will just hit their SLAs, I would be expecting that they can offer you better SLAs for the same or a reduced price.
Thirdly, look at how you can lower operating costs by optimising processes, reducing waste and effort. Usually, there is the expectation that a supplier will change their processes to match your own. In my experience, that is a big mistake that leads to higher costs and unnecessary complications in the delivery side and higher risk at SLA achievement. I am not advocating that you should be changing your processes to match those of the supplier but merely that you can work together to streamline the process from both sides. Aside from the financial benefits, you will make the process easier, enhance the quality of delivery and ultimately make the experience better for your end customers/users, the supplier and yourself as supplier manager.
I left for last an area that I consider the pinnacle of collaboration, joint product development. You have aligned the day to day operations, simplified processes and enhanced service levels. It is now time to look at the future and how you can further boost revenues and profits. Your choice of strategic suppliers is because they offer a service which is not in your core of products/services delivered. This is why you outsourced it. The opportunity to collaborate with a strategic supplier to develop a new product or service that will boost the core product offering for both organisations by utilising expertise from both sides can be the confirmation of the relationship having reached the top strategic level.
The above is by no means an exhaustive list of benefits from a strategic supplier relationship. It is in my view some of the key benefits one should look to accomplish.
Check “Strategic SRM: 6 Step Process” here!