Buyer-Supplier Collaboration. Why Does it Matter

Supplier Collaboration is now crucial to keeping an open communication channel with your partners and ensuring your business will not suffer in case of disruptions.

Good supplier collaboration and engagement will help consolidate your supply chain.?Establishing collaborative and almost personal relationships?with your current and potential supply partners could lead to a greater competitive advantage and open the gate for innovations. What is more, it builds resilience, and that’s an important ally in today’s disruptive economy.??

Buyers and suppliers are the two faces of the same coin. When they are willing to collaborate beyond the traditional transactional arrangements, they could unlock significant new resources that could benefit both of them.??

Why You Need to Ensure you Have your Supplier Collaboration??

One McKinsey survey?conducted on 100 large organisations from multiple industries showed that the companies collaborating with their suppliers recorded higher growth than the others. The operating costs also lowered, and the overall profitability increased.??

So, where does supplier collaboration starts and where does it end? And why is it so difficult to attain? Well, first of all, because you need the right people for that. Secondly, you need a unified message and a personalised voice that will make your supplier feel “at home” when collaborating with you.??

Supplier engagement is an ongoing activity that should have a separate department in your supply chain management or at least a dedicated team that can:??

• Improve your procurement transparency??
• Make a plan and a map of every visit and activity of engaging with the supplier market??
• Build trust with your suppliers by making certain activities and procurement processes easily accessible to your providers?
• Facilitate feedback from your suppliers??
• Find and improve new ways of engaging with the suppliers; get to know your partners up to a personal level?
• Keep an open message channel with your suppliers 24/7?

Although all these things look so good on paper, the benefits of supplier collaboration have been hard to access. This is mostly because it is difficult to integrate such a team/department into a stiff supply chain management structure. And more than that, it is difficult to manage.??

The Main Barriers to Supplier Collaboration??

The first barrier is time. It is our most limited and loved resource. Running such a supplier engagement team will require time and a lot of effort to recruit and manage.??

In short, it will take a lot of time before such an internal team generates value, and the disruptive economy of today won’t allow it.??

More than that, this supplier collaboration team would have to break a few well-established mindsets and structures. It needs to operate organically, in a very agile and sometimes unorthodox way. Your company’s rules and regulations cannot tangle it.??

Collaboration between providers and buyers does require a change in mentalities. To pass the barrier of the classic transactions into more personal phone calls and Happy Birthdays is almost like breaking the sound barrier. It is tough.??

These collaborative efforts are intense, almost 24/7 work at first. It is a shift from the traditional transactional working methods of the past. In a word, a great supplier collaboration requires a paradigm shift in the way your company thinks and acts within a supply chain.??

Even if your company is able to make that shift and redesign its processes and internal structures to integrate this way of work, it would still lack the right staff with the right capabilities to run such a buyer-supplier collaboration team.??

Supplier collaboration is more than just designing and applying a certain framework. It is an unbeaten track that requires commitment.??

Why an External Solution is the Best?

Picture a team of 5 local people in?five different?locations, keeping in touch with your suppliers and checking on them weekly. In time, they’ll build a bridge of trust and communication.??

Clear objectives have been communicated to this team of independent contractors, and they have been recruited and trained by a company specialising in supply chain management collaboration. Yes, that’s us.??

Building trust is not easy. It usually means starting small, with one or two people. A simple phone call and visit on-site, meeting with your supplier’s people will build momentum. Our team of independent contractors will have a single goal. To check on your providers and partners and provide you with visibility and transparency. In time, that will lead to building trust and an open communication channel.??

Our independent contractors won’t be held back by any of your internal organisational procedures and processes. They’ll act independently, in your own interest, based on a plan that we’ve previously agreed upon.??

There are two dimensions to supplier collaboration?

You need to ditch the “order by order” relationship where you place and order, pay when the order is fulfilled and be done with it. In this situation, the supplier won’t know your commitment, and whether you might have other orders for them.?

Instead of that, you need to set a broad interaction channel. This is where our independent contractors will meet with your suppliers, set expectations and goals for their collaboration. They will communicate and discuss future orders and capabilities. This way your supplier will know they can count on you to cover future orders, and you can count on them to have them fulfilled. Our independent contractors will monitor and evaluate your suppliers’ capabilities, report back to you, and keep this communication channel open.?

The second dimension to supplier engagement is the deep engagement. This is where things should and will get more personal. This is where a partnership can form. A close partnership with your suppliers means preferential pricing, close agreements, trust. It could also mean calling to say “Happy Birthday”, “Happy Holidays” and that sort of pleasantries. A partnership will also mean granting favours. For all of these you need an open communication channel with your suppliers.??

We call this method “Your Eyes on Site”. We carefully recruit and select the people that will provide you with these “eyes”. In time, they’ll build cross-functional engagement, become part of your and your suppliers’ company. This type of cross-functional engagement leads to innovation, brings value to the entire manufacturing process.??

And you know the good news? Not many teams employ this cross-functional collaboration. Big companies such as P&G have already created joint teams working and innovating together with their suppliers. But this is the bigger picture, the big step.??

The first step is to ensure a homogenous collaboration with your providers and partners, a telephone-away distance that will make all the difference in times of disruption. This is what proper supplier collaboration really brings to the table.??