The relationship between supplier and customer is critical to both parties. But it most often falls on the customer to manage that relationship because while the supplier has plenty at stake, the customer has their own customers to consider. And if the product being delivered to the end customer falls short of expectation in any way, the customer will be the first to feel the impact. Supplier relationship management (SRM) is no longer just a ‘feel good’ part of the business. It’s critical and is being treated as such, and automated to a large extent. Having fast and accurate evaluation of supplier performance and acting in positive ways to either assure stability or taking quick action to avoid problems needs to be at the top of the list for companies that want to assure the best results for their own customers Here are four areas to pay attention to when managing the SRM.
It’s the relationship
With the bulk of supply chain interactions happening digitally and automatically it’s easy to lose track of the fact that actual individuals make up the companies on either side of the transactions. But it’s when things don’t go exactly as planned that those people have to get involved and resolve the issues that are halting the flow of goods. Managing suppliers successfully means creating a trusting environment with cooperative involvement that approaches problems collaboratively, without trying to place blame. Sometimes someone is actually at fault but it’s rarely intentional. Fanning the flames of blame only delay resolutions and put what was likely a good relationship into a downward spiral from which there may be no return… and a loss of a profitable partnership.
Data is everywhere and certainly there is plenty being generated and stored with every supply chain transaction. That data can and should be used to track performance of both the supplier and the customer against the initial agreements that started the relationship. It’s easy enough to exaggerate the importance of a single incident that happens at a critical time and extrapolate the failure across the entire history of the relationship. But individual incidents should be added to the pool of historical data and compared against past performance to get a full picture from which to take action… or not.
Make it good for everyone
Your suppliers are doing business with you because it’s good for them and for you. Both parties are benefiting from the relationship or there would be no commerce between them. Pay attention to performance and the benefits on both sides of the contract. Good working relationships in which the positive aspects are shared to a greater extent than are the negative are proven to increase the benefits to both companies.
No minimal impacts
Even a small issue can have a ripple effect, and that applies to both positive and negative issues. Certainly its important to minimize negative impact whenever possible but skipping over them is likely to lead to undesired results that blossom into bigger issues when not addressed. Keep the positive aspects of supplier/customer relationships at the forefront and acknowledge problems for what they are to build trust and improve performance on all sides.
Effective SRM can make a big difference in the business results of both suppliers and customers but it needs to be understood, acknowledged, and managed on a continuing basis.