Just like any relationship, the partnership you have with your suppliers requires upkeep, collaboration, and investment. For business operations to run smoothly, your organization needs to know that your suppliers can meet your demands and deliver on their promises. Creating a network of suppliers you can trust will help ease tensions and foster a resilient supply chain. But how do you begin? How do you nurture relationships without creating codependence? It all starts with a vested interest in supplier relationship management.
Why does Supplier Relationship Management matter?
Understanding the nuances of your supplier relationships can help you and your suppliers to better meet one another’s needs and find opportunities for improvement. As you manage your supplier relationships, there are three main areas to focus on: relationship evaluation, partnership nurturing, and added value.
Relationship evaluation: This area includes both the initial evaluation and the ongoing evaluation for your current suppliers. Before entering into a partnership with a supplier, you need to evaluate whether they are up to your standards. For example,. are they able to fulfill orders on time? Do they have a strong communication structure? Are they reliable?
Even after you’ve selected a supplier, it’s important to evaluate their effectiveness on an ongoing basis. Your organization needs to know whether your suppliers are performing as expected or lagging in any areas. No business relationship can be fully functional if there is a lack of understanding about responsibilities, needs, and expectations.
Partnership nurturing: It may feel awkward to discuss your needs and expectations with a supplier but this is a conversation you can both benefit from. As a critical component of your mutual success it is important to build a cadence of honest communication. When both the buyer and supplier share their changing needs and expectations, it strengthens your relationship and creates an authentic connection where both of you are less likely to be surprised by an update to your partnership requirements – or burden from a supply chain disruption.
Added value: You and your suppliers should always be on the lookout for ways to add additional value to your relationship. As you work together, analyze your process for gaps or potential barriers and call out areas where suppliers can improve. Don’t be afraid to also uncover the opportunities to strengthen your supplier by providing guidance around where they could extract value through line extension or productivity efficiencies. Value underscores the relationship between the supplier and the organization and is consistent—unlike the partnership requirements that can flex and change throughout the lifecycle.
It’s not only important to identify the requirements and ensure suppliers meet them, but it’s also essential to continuously improve the relationship with your supplier to get the most from their services. To accomplish this, a transparent, communicative, and collaborative relationship must exist so both parties can find areas to improve with efficient solutions.
Bonus Material: Download your copy of our Supplier Onboarding Checklist.
The benefits of investing in Supplier Relationship Management
Having a network of suppliers is good. But connecting to that network with a strong supplier relationship management strategy that adds substantial value to your business operations is even better. Some benefits your organization may see from investing time and energy into your supplier relationships are:
Scaling your supplier base
Globalized business processes enable organizations to connect to suppliers all over the world. While there are many benefits to an increase in the number of suppliers available, this also increases the number of suppliers you need to manage. For many businesses, this means that their scale of operations grows more extensive and more sophisticated. Managing the lifecycle of hundreds of suppliers at one time while building and maintaining good, strong relationships with critical suppliers is no easy task. Ensuring your supplier management process includes relationship management makes it easier to manage your growing base of suppliers.
Deriving value
To keep upper management happy, you need to prove the value of every business relationship. Organizations have begun to recognize the need to quickly and efficiently identify cost-savings opportunities within their supply chain. Supplier output has come under scrutiny as well, as it directly impacts the organization’s bottom line. This past year has shown how important it is for organizations to react quickly to disrupted markets and how crucial it is for businesses to conserve spending wherever possible. Finding ways to add value to your supplier relationships will help you reduce extraneous costs.
Streamlining data for analysis
As your supplier base grows, so does the amount of actionable intelligence you can gather from it. . The problem is, with hundreds of suppliers, it can be easy for data collection and analysis to become time-consuming, disorganized, or just plain overwhelming. It’s essential that your valuable information and data regarding your supplier’s lifecycles are streamlined as your supplier base grows. The number of suppliers you have good relationships with directly correlates with your ability to streamline your data, analyze it effectively, and build a plan to create further efficiencies.
Compliance adherence in the supply chain
Managing the compliance of many suppliers as your supplier base grows can quickly become a headache. With a supplier management system, you can eliminate the tedious tasks and see in real time which of your suppliers are in compliance and which are not. Noncompliance is one of the largest financial burdens for businesses, so ensuring that all your suppliers remain compliant is one of the biggest benefits of having a strong supplier relationship management process.
Risk Avoidance and Early Warning Signs
Growing your supplier base means opening the door to increased levels of risk. As your processes and supply chain become more complicated, so do the risks. One way to manage this is to invest in creating a strong supplier relationship. With a supplier management process in place, you can assess risk potential early and save time and money.
A strong supplier relationship management process benefits both buyers and suppliers. When buyers collaborate with their supplier base and work with them on the requirements they expect, the resulting, long-lasting relationship benefits both organizations. Utilizing a process that fosters communication, nurtures trust, and provides transparency can be one of the most important things a supplier can do to strengthen their supply chain.
Tradeshift helps buyers and suppliers instill value in their relationship from day one with Tradeshift Engage. Suppliers don’t want to just be pushed through another portal. Our network provides added visibility into supplier and buyer relationships and gives suppliers a dashboard view into their transaction and payment analytics.
Insights + real-time transaction data = value-from-day-one.
For more information about how Tradeshift can help create a stronger buyer/supplier relationships sign up for a free demo today.
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