Best Practice for Managing Supplier Relationships

Importance of Supplier Relationships

Recent studies have shown that poor supplier relationships have cost US automakers up to $2 billion. For all of these organisations value from their suppliers was lost by failing to manage and unlock the additional value from relationships.

Many of the advantages of working with a supplier that were tirelessly identified at sourcing stand a good chance of falling away over time if the relationship with a supplier is not maintained. The result? A disengaged supplier or worse, an adversarial one.

Is an adversarial relationship likely to encourage that supplier to go above and beyond the call of duty? How much will that cost your organisation in the long term?

Ultimately maintaining good relations with a supplier should be as important to a contract as getting the best price.

Biznet Best Practice

Biznet have over a decade’s worth of experience helping organisations drive improved supplier performance using our world class SPM solution, BiznetP6. We understand that driving a suppliers performance requires focus and management of the overall buyer-supplier relationship.

How BiznetP6 can help drive a simple and effective supplier relationship process;

  • Electronic Survey- Simple surveys issued to all stakeholders in the relationship through the BiznetP6 system are a fast and efficient way to gather and collate data.
  • Automation- surveys can be issued to stakeholders at scheduled intervals. The BiznetP6 system will also issue reminders to prompt users to submit their data.
  • Reporting- gathered data is instantaneously collated and made available to users in real time reports. These reports are available to both the buyer and the supplier.
  • Scoring- surveys scoring ranges from 1-5 with an option for `n/a`. This universal scoring facilitates direct supplier comparison.
  • Data storage- all of the data collected on the relationship will be securely stored on the BiznetP6 database along with an audit trail, comments and attachments.
  • Fast implementation- a survey can be issued to all suppliers quickly and efficiently.

Win-Win

Having a process that is dedicated to measuring the metrics around buyer-supplier relationships are win-win. Why?

  • Two way Communication

It encourages open communication and dialogue with all suppliers regardless of their strategic significance. Some suppliers may be on-site every day whilst others on a more ad-hoc basis. Using a tool like BiznetP6; the health of all your supplier relationships can be reported on using live data and directly compared. Furthermore it gives suppliers the opportunity to provide their perspective on the relationship.

  • Encourage Additional Value

By highlighting to suppliers relationship metrics such as communication, innovation, quality of staff etc. it encourages suppliers to go above and beyond the minimum levels of service. This in turn can potentially lead to increased business and prestige for the supplier.

  • Develop Longer lasting Relationships

Every business wants to work with suppliers that they know are reliable and working for their best interests. Likewise, suppliers want to know they are working for organisations that value them and the service they provide. Whereas performance metrics based on products or services provided focus on the hard numbers, a supplier relationship survey can shed a spotlight on the `soft` issues such as;

  • Quality of staff
  • Communication
  • Billing/payment
  • Innovation
  • Overall impression

Getting Supplier Buy In

Occasionally organisations struggle to get suppliers to buy-in to their supplier relationship process, whether this is a formal scorecard or survey.

To help with this our team have put together a number of tips to help overcome these issues;

  • Explain the process to suppliers. If a supplier understands how the data is used, potentially at quarterly performance reviews, then it encourages more interaction.
  • Ensure the data is used efficiently and effectively to action issues raised.
  • Engage with suppliers early in the relationship.
  • Have senior management drive the initiative.
  • If possible, make co-operation condition of doing business. Involvement and engagement in a supplier relationship programme can be viewed as key performance indicator for that supplier.

Want to learn more about how Biznet can help your organisation better manage supplier relationships? Contact us today.

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