Supplier relationships and their value to procurement’s overall success are often overlooked. In fact, they are sometimes seen as “unimportant” to strategic sourcing and are pushed aside in the relentless drive for lowest price, “best ever” terms, and “smokin’ deals”. Don’t be fooled! A strong, trusted, and collaborative relationship with suppliers can be the difference between success and failure (or at the very least, mediocre success) for a procurement team.
Suppliers are not adversaries, the ‘bad guy, or your foe. Without suppliers, procurement doesn’t exist (after all, there is no purchasing, nothing to procure, if not for suppliers). Establishing and nurturing strong relationships with key suppliers is a foundation for a successful procurement and sourcing function.
There are huge and lasting benefits to having strong supplier relationships (and even bigger risks and drawbacks if you don’t). The adage that we are stronger together than apart is so true!
Here are some of the key benefits of having good relationships with your suppliers.
Trust & Transparency
When you have a strong relationship with a supplier, one that is grounded on mutual respect and a genuine desire for mutual success, you have the foundation of a trusted relationship, and potentially a trusted partnership. Neither party is trying to trick or beat the other one. After all, if you “defeat” the supplier, they will not and cannot be able to support you, nor deliver successfully for you.
A trusted relationship means that you and the supplier will be honest, forthcoming, and as reasonably transparent with each other as each business allows. It isn’t a poker game, where you hold cards close to your chest, or even worse, have a few cards up your sleeve. Having sight of each other’s objectives and pain points lets both you and supplier try and seek collaborative solutions to problems, and ultimately to achieve greater success.
A Helping Hand
No matter how much we wish it wouldn’t happen, from time to time, you need the supplier’s help - an emergency order, an expedited shipment, or help with solving a problem or overcoming a challenge. If you have a strong relationship with the supplier, more than likely they will try and help you. Of course, as in any relationship, you can’t always be coming with your hand out, asking too often for favors, nor can it be one-way street. You must be prepared that the supplier may also ask you for similar assistance.
This does not mean that you and the supplier will always be prepared or able to help the other one, but if you do not have a cooperative relationship, it’s almost certain that help won’t be forthcoming.
Having a strong and positive relationship with a supplier does not ensure that you will always agree. Each company will have its own goals and its own priorities, and there will be times when no matter how good the relationship is with the supplier that you will disagree and conflict. But a good relationship lets you move past those situations and move forward in a positive fashion with the supplier.
And no, having a partnership does not mean that you lose leverage. Quite the opposite is usually true. The stronger the relationship with the supplier, the more value, both direct and intrinsic, that you can achieve.
Bottom line, suppliers are not the enemy. Successful long term strategic partnerships are a key part, if not a pre-requisite, to successful strategic sourcing and procurement. Any chain, and this includes supply chains and procurement, are only as strong as the weakest link – do not let supplier relationships be that weak link!