These days in the context of supplier management you see a lot written on soft skills such as relationship management and its importance in effective supply chains.

In short, relationships build partnerships, and good partnerships provide a route to performance. Gone are the days of a stuffy formal relationship, effective procurement teams these days rely on building trust and personal relationships or do they?
My guess is that we’ve all experienced both good and bad supplier relationships first hand. Adversarial relationships can be of course be a challenge but does it reduce performance? In my experience it almost certainly does. Effective supply chains need attributes such as great communications, understanding and a no blame culture to produce the required performance results. Adversarial relationships typically belong to high cost and low performance.

When you think about it this isn’t much different from personal relationships, and indeed many of the tools that deliver effective personal relationships also deliver killer business relationships so it shouldn’t come as a surprise.

The actual process of managing a supplier relationship can utilize many tools often these are dependent on the type of supplier you’re dealing with and the stage that the relationship is at however there are some fundamentals that you can look to use.

Great Communication

While its somewhat stating the obvious, communications is THE key principle in any relationship. Effective communication helps establish trust and can prevent minor issues becoming bigger ones. Communication doesn’t have to be verbal but can be supported by a flow of information that is usable to both parties. The trick is to have methods that allow information to be shared quickly which support both parties and their processes.

Partnering culture

Part of the trick to relationships is avoiding blame. Both parties must realize that problems happen and the trick is to work together to solve them, without retribution on the other party. Seeing the relationship as a partnership where working together to resolve issues is seen to deliver real performance gains can add significant weight to the relationship.

Appropriate use of Supply Chain Technology

Technology can be a wonderful thing and it can also act as a millstone around your neck if it’s either not fit for purpose (doesn’t work) or not appropriate (wrong tool). I’ve seen plenty of suppliers provided e-trading tools by customers only for the tools to fall significantly short of being something usable – this can build huge levels of frustration within the supplier and hamper effectivity. Technology can be great but time needs to be spent up-front to ensure that it’s adding the expected value.

Celebrate feedback

Relationships shouldn’t shy away from providing feedback where things can be improved. The relationship should work within a continuous improvement cycle and both parties should look to discuss issues openly (in an appropriate forum). Also look to celebrate the good. Focusing on what works and the victories along the way can help bind both parties and strengthen the relationship.

You are not the suppliers only customer

Don’t pretend you’re the only customer. My final comment is to remember you are not the suppliers only customer. We can all get swept up with the day job and there is often a tendency to over demand but do provide sufficient space for the supplier to service other customers. It’s in your interest for the supplier to succeed and to do that it needs a strong customer base, it won’t get that if you take up all their time and disable them from serving others.

Have some thoughts on supplier management – we’d love to hear from you in our comments section below.


One Response to “5 ways to build better supplier relationships”

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