Delivering benefits from closer collaboration between suppliers and customers can not only strengthen the links between them so that the relationship between the supplier and the customer is one of mutual trust, but it can also deliver tangible benefits of efficiency. Here’s our top 10 benefits for closer supplier collaboration.
Best Practice Shared: Collaboration results in best practice being shared throughout the supply chain. All those within the supply chain are aware of what is required. There is a real understanding of what the goods supplied will be used for and what causes problems within the supply chain.
Fewer defects: The sharing of best practice also results in improvements being made on a continuous basis, thereby reducing the instances of waste or poor value. Goods that are defective or substandard are simply not supplied, which in turn drives down any ‘glitches’ within the supply chain.
Improved communication: Communication is a direct result of closer collaboration with suppliers. For them to be aware of the requirements that the customer has, there has to be communication.
Suppliers get to have a voice: The collaborative approach requires communication to be two way, with suppliers being able to report any problems to the customer and hopefully they can then work together to ensure that these are eliminated.
Continuity of supply: The process of managing supply chain risk improved because the supplier is able to plan effectively for the future. Due to operating within an exceptionally competitive market, there is always a risk that the supplier will not survive, especially if they have cash flow problems. However the collaborative approach means that the supplier will be able to plan for the future, knowing what share of the market they will be able to retain or even expand into, with reasonable accuracy.
Improved stability: Stability within the supply chain cannot be overestimated. Any supply chain that is unstable will have stock outs, will have an inability to meet sudden peaks in demand and ultimately will not provide a good service to the customer. So collaboration helps to stabilise the supply chain in a way that was almost unimaginable only a few years ago within the Western World, although such stability had long been achieved in the Japanese car industry.
Flexibility: The closer the collaboration between suppliers and customers ensures that the supply chain can meet any peaks or troughs in demand. The flexibility of approach can actually make a huge difference to the customer. They will be able to take on new contracts with little notice or they will be able to withstand periods of low demand, simply by working in a close relationship with their suppliers.
Reduction in costs: The reduction of defects and the time saved within the supply chain means that the supplier is able to lower the costs of goods supplied, which is a benefit to the customer but also helps the supplier to keep afloat and stay competitive. Collaboration can be an good driver for cost reduction
A mutually beneficial relationship: Whereas in the past, the relationship was between supplier and customer was adversarial and the supplier was often seen as being wholly dispensable. The supplier knew that this was how they were viewed, so they had no interest in responding flexibly, they knew they could be replaced within a matter of days. Now they could be replaced, but both parties recognise that there is a vested interest in them both working together.
An optimistic future: The final benefit of closer collaboration with suppliers has to be the potential for expansion and new opportunities that are presented when the supplier and the customer find that working collaboratively makes them a very strong team!
Comments
3 Responses to “10 Key Benefits Of Closer Collaboration With Suppliers”
good but still needs some more clarification
I think people sometimes underestimate the power that a supplier can have in helping your business. Having a good and long relationship to suppliers for inventory can mean that they might offer you a better deal, or early access to limited goods as well. I would guess that having a network of services that you have cultivated a good relationship with, will in the end pay off, and could make the difference.
Thank you for this information.As a business student, the collaborative relationship in the supply chain is the key to a successful business because those are the people who atually give your business a difinition. Thank you