True collaboration has to do with sharing information, skills, innovation, risks and benefits. Although this is a wide cultural shift for most companies, there is a huge advantage that comes with it. We’re talking improved efficiency for both parties, continuous improvement and most importantly, better decision making process. So, instead of the constant demand for suppliers to improve price or value, there can be a balance where both business and suppliers are a huge part of product development. This is called working hand-in-hand towards the same goal.
Why is There a Need For Supplier Collaboration?
According to a statistics conducted by Oxford Economics, 65% of businesses now say that their product procurement is now leaning towards collaboration with suppliers. This is because of various reasons;
- Businesses must respond to market demands as quickly as possible. To stand ground against market competitions, supplier collaboration is necessary to create products that are significantly different from their competition and provides what is needed.
- To understand the capabilities existing on both sides. Collaboration creates understanding on both sides which eventually leads to sharing same quality ideas. We earlier talked about moving collaboration beyond technology. This creates more understanding of what both parties can do in order to improve on value and continuous innovation.
- Supplier collaboration promotes sharing of information for improved decision making. It creates a balance in the supply chain that ensures that the right inventories are available at the agreed time. In case of any changes, both parties would be clearly notified.
- Optimizing cost efficiency. In supplier collaboration, the supplier is not only dealing with you but also your whole team. This includes your inventory managers, quality check team and your engineers. Aside from working to produce the best quality, they are also doing the work in relation to cost efficiency to favor both sides.
- Getting the best out of the collaboration relationship. There are lots of win for both parties involved. In every way, there’s always something in it for you. You just have to realize what it is and milk it.
Knowing about supplier collaboration is not enough. Business inventory/ supply managers must look for ways to gain more credit out of this collaboration. The supply management has easily been overlooked in businesses without realizing its potential in further improving a business’s supplier quality performance. Remember supplier quality translates to your business quality also.