Subscribe to the blog

Get the latest Procurement insights from our experts

Transform supplier collaboration into a competitive advantage

by | February 5, 2019

Procurement systems are most powerful when the majority of spend and suppliers are flowing through it. In turn, this helps improve the user experience, increase compliance and savings and reduce costs. Supplier enablement services can dramatically increase the number of suppliers enabled onto your systems and in turn increase the benefits your organisation can achieve.

Enabling your suppliers is very important as it can unquestionably increase performance metrics. By having a supplier enablement strategy in place on the long term your business can reduce errors, maximise value, improve compliance and one of the most important aspects, can create long lasting profitable partnerships. Close collaboration with suppliers can boost cost optimisation across the supply chain.

Take your supplier relationship to the next level!

Supplier management is very crucial and when analysing your supplier base we suggest considering the following 3 questions:

  • Which suppliers add value to both the business and our external customers?
  • How do we boost value when engaging with our suppliers?
  • Which suppliers provide a competitive advantage?

Earning your suppliers’ trust can either make or break a business. Listening to their concerns and helping them to connect to your processes or systems helps in making them a trusted partner in your organisation.

If you are willing to invest into cultivating meaningful supplier relationships and you start treating them as your partners, both organisations will gain higher success rates and the relationships can evolve into strategic partnerships that will hugely benefit both businesses.

Transforming your relationship with your suppliers

Dr.Cavinato from the Institute for Supply Management carried out extensive research on supplier relationship management, this research revealed around 145 different forms of formal and informal relationship between buyers and suppliers.

As the research shows: “These roughly group into the following eleven relationships, listed from none to full integration: don’t know the supplier exists, no reason to use them; don’t know they exist, might use them, arm’s length price relationship, price relationship, informally cooperate on operative level for efficiencies; price relationship, formally cooperate for longer term efficiencies; total cost relationship; opportunity sourcing; innovation and top-line, revenue-driven relationship; joint venue, one invests in the other, gains benefits from having done so; one purchases the other, vertical integration”. Dr Cavinato also points out, “Supplier relationship management is usually found with relationship number 3 through 6.”

Converting your supplier collaboration into a competitive advantage is not going to happen overnight and is not going to be easy. In the next few years improving these relationships should be a priority for all procurement experts. Being able to choose the best-suited strategic suppliers will enhance the value of the suppliers and the overall return on investment.

A key element in achieving a better collaboration between your organisation and your suppliers is communication.

Better communication = better relationships

Treating your suppliers as business partners can have a huge impact on your company’s processes. They can play a central role in driving revenue and increasing profit. Also, keeping them involved and up to date with your strategy so that they know where they fit and how they can help can go a long way in building these types of relationships.

Our procurement consultants can help you transform and improve your supplier collaboration! Don’t hesitate to get in touch!