5 Tips to Improve Alignment in Supplier Relationships
Supplier Management is a core function of the Sourcing and Procurement capability within any organization. Sometimes, its importance can take a backseat to the endless meetings, action items, and daily fires that can arise. If performed right, however, Supplier Management can help to reduce the number of fires and keep the focus on achieving your company’s goals. In this article, we will discuss five tips to improving alignment between your company and your supply base.
1. Work Towards Win-Win Solutions
Regardless of the type of relationship your company has with a supplier (i.e. — strategic, tactical, or transactional), the desired outcome should be a win-win for both parties. If your company’s objective in interactions is to accomplish its desired goals regardless of the burden to your supplier, this hurts the relationship and alignment between the parties. Similarly, if your supplier isn’t helping you to achieve your company’s goals when the impact would be low to their business, this also fragments the relationship.
With this in mind, how can you drive to win-win solutions? Look at the goals for your company and determine the priority items that will lead to the wins for your business. Reflect on the goals of your supplier and listen to their concerns. If one of your goals conflicts with their concerns, brainstorm together a different approach that can help you accomplish the goal without negatively impacting their ability to support their customer base. Together you can determine a compromise that benefits both parties — a win-win solution.
2. Communicate Clear Expectations
Unclear expectations leads to frustration and missed goals. Being clear up-front with your suppliers can ensure that both parties are on the same page before the engagement begins. But, that isn’t where communication should stop. Communicating regularly with your suppliers allows them to course correct when needed without damaging the relationship. It allows them to understand what is important to your business in changing times to support your company in an agile way.
Without regular communication, both parties are left with assumptions of what the other is expecting or going to accomplish in a certain time period. These assumptions can lead to failed projects or engagements. Communicate assumptions, expectations, and requirements regularly to reduce the friction in the relationship and improve alignment.
3. Alignment of Vision
As you search for partners in the supply chain, seek out suppliers that align to the vision of your company. If both companies are driving toward a similar goal, it makes it easier to work together even when challenging times occur.
Partnering with suppliers that don’t align to the vision of your company can cause distrust in the relationship if the supplier begins making choices that conflict with your vision. For example, if you’re company is focused on it environmental impact, and a supplier doesn’t align with that vision, they may make choice that align with their business model which could inadvertently cause your organization’s integrity to be called into question. By working with suppliers that align to your company’s vision, this risk is reduced and both parties can work together toward solving the common goal.
4. Leverage Data to Drive Behavior
Measuring the right things for your business will help to drive clear expectations. Defining performance measures upfront and walking through them regularly with the supplier not only improves communication, but can focus the conversation on what matters for your business.
During performance reviews, leverage data to drive the communication. This can enable direct, fact-based discussion about adherence to expectations that were aligned beforehand. This type of approach shifts toward objective conversations which can keep relationships intact, even when difficult conversations are necessary.
5. Leverage Technology
Leveraging technology to create alignment in your supplier relationships can improve the daily processes of engaging with suppliers. While there are many options such as e-commerce, contract management systems, supplier relationship management systems, or enhancing capabilities through automation, predictive analytics, AI and machine learning, or blockchain, it is all about what makes sense for your business and your relationships with suppliers.
Leveraging technology can empower teams to achieve goals and deliver better solutions than were once considered possible. Apply the aspects of technology that can help your business flourish working together with your supply base to make your company’s vision a reality.
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