In 2014, Aston Martin, the British luxury sports carmaker was forced to recall 17,590 cars after discovering that a Chinese sub-supplier was using counterfeit plastic material in a part supplied to them – an incident that best illustrates the importance of having a strategic supplier relationship at least with their key suppliers. Many incidents such as this have gone to prove that strategic partnership is the key for supply chain resiliency!
Partnering with suppliers (or customers) to develop deep, mutually beneficial relationships over the long-term is frequently cited as a means by which to lessen that risk and develop true supply chain excellence.
But according to Sherry Gordon, author of "Supplier Evaluation and Performance Excellence" and president of management consulting firm Value Chain Group "Suppliers are sometimes wary of some customers using the term ‘partnership’, as customer firms may erroneously view partnerships as a way to get more out of the supplier in the form of price concessions, for example without any mutual give and take.”
Hence ideally, a strategic partnership with suppliers should be one based on trust and mutual benefits.
How to build a strategic partnership with your supplier
The Chartered Institute of Procurement and Supply provides some valuable tips:
- Focus on the relationship. In today’s world, managing the supply base is about strengthening relationships that can make or break your business. Earning your suppliers’ trust with honest communication, listening to their concerns and involving them in your processes ultimately makes them a vested partner in your business.
- Analyse your data. Teams that put a greater emphasis on qualitative and quantitative supplier data analysis will be able to quickly and succinctly identify weak spots, risks and opportunities in the global supply chain - improving the strategies and plans needed to manage the suppliers, and ultimately both businesses, for continued success.
- Be mutually beneficial. If you are aligned with your suppliers and treat them as partners, both businesses will experience higher success rates, decreased risks and enhanced collaboration and innovation. Studies have found the top procurement teams that have successfully aligned with their key suppliers have improved supplier capabilities of innovation, quality, reliability and costs/price reductions and agility to reduce risk factors. Greater value can be achieved for both businesses, something that would be difficult to achieve if operating independently.
- Embrace new technology. Have a system in place that makes it easy to view your suppliers and analyze all of the risk factors. Using SCM technology provides you with full and unparalleled visibility into your supplier base, giving you a detailed picture of what is impacting your supply chain and making it easy to mitigate the risk.
Successful partnerships in SCM yield a faster time to market, transactional efficiency, competitiveness, risk management, and large financial gains - all of which not only contribute to your bottom line, but also allow you to deliver a quality and cutting edge product, putting you ahead of the market.