You only need to read a few supply chain articles to realize that collaboration with suppliers is the key to successful relationships that will ultimately drive the best overall value to companies.
Some people in the industry believe that strategic sourcing has largely run its course. In the future, companies will need to achieve more through closer and more transparent relationships with their suppliers by building contracts based on best practices rather than continuing perennial rounds of bidding.
An article by Supply Chain Management Review in October 2012 discusses the need to allocate resources to SRM initiatives and states that procurement is in need of resources “who are active participants in the hunt for value with a big picture view.”
Sounds great, but the question is: “where can we find these people?”:
Through the development and deployment of a business advancement meeting mindset and strategy, both companies and suppliers are positioned to create new value in their relationships, the heart of SRM.
Key success factors for establishing a business advancement mindset and meeting strategy:
THE DATA DUMP
The quarterly data dump is a necessary evil, but it should not be the basis of any quarterly or semi-annual relationship review. Suppliers should be sending the data from the previous quarter in advance of the review meetings. It is also incumbent on the company to have reviewed and ask any questions in advance of the meeting.
Companies must share with suppliers their business information, goals and objectives of not only the company, but also of their procurement department. In return, suppliers should be open to learning more about their business and apply the knowledge to be creative on ways to innovate new solutions.
Companies and suppliers must begin profitability discussions, which strike at the heart of sustainability. Although hard discussions to have, they are critical to the health of the relationship and demonstrate a level of partnership that goes well beyond tactical procurement initiatives.
FINDING NEW VALUE
This is the critical component of the business advancement meeting and Corporate United spends significant time on educating the supply base.
Suppliers must bring value to the table that goes beyond just lowering piece price. They need to be able to structure conversations with companies that identify program cost drivers and areas of improvement. They must educate the company on what best-in-class looks like and make recommendations on how they will collaborate to get there. Finally, they are tasked with defining any disruption costs or risks involved in achieving the results.
With the application of program management checkpoints, each party should start to see improvements in the relationship that can lead to achieving organizational goals and objectives.
Ultimately, when the business advancement strategy is done correctly, both suppliers and companies win.