Modern supply chains are somewhat like Rube Goldberg machines — incredibly, often unnecessarily complicated, interconnected systems where a single disruption can trigger a chain reaction, impacting the entire operation. The globalization of supply chains has added even more gears and levers to the machine, increasing disruption potential and the challenge of managing it all.
Given the hyper-competitive nature of the manufacturing industry and how reliant each part of the supply chain is upon the various other players up and down the line, establishing strong supplier relationships is vital. By working closely both with upstream and downstream partners, manufacturers can enhance supply chain resilience, optimize operations, and ultimately, foster a better experience for the end consumer.
But what does supplier relationship management involve?
We explore that answer here, in the second blog of our two-part blog series on “Survival Strategies amid Supply Chain Disruptions & Economic Uncertainty.”
Supplier relationship management (SRM) is one aspect of supply chain management that was first proposed in light of an increasingly globalized approach to supply chains.
It’s a systematic approach to evaluating the various vendors responsible for supplying a given manufacturer with materials, components and services necessary to produce their products. While SRM may have several underlying goals, three of the most important aspects include:
Nurturing robust partnerships with high-quality suppliers is a powerful way manufacturers can position themselves for long-term success while minimizing their overall risk profile. Some notable benefits of strong relationships include:
How do you know if a supplier is a good fit for your company? While the exact methods of determining partner viability may vary from one supplier to another, some of the key items to consider include:
Strong relationships form the firm foundations upon which all future negotiations rest. If your partnership is robust, you’ll be able to be more transparent and operate with confidence, knowing that you understand and respect one another. Ideally, this will result in walking away from the discussion with a mutually beneficial agreement.
Even so, remember that any time you sit down at the negotiation table, that relationship could be damaged, especially if you focus solely on your own interests. Here, communication and trust are pivotal. One type of negotiation style may work for one supplier but not another. Building strong relationships will enable you to determine the best approach to take.
For manufacturers, suppliers along the value chain function as an extension of your company. Because the system is so interdependent, all it takes is a single bad apple to create problems up and down the line. Conversely, if you fill your chain with high-quality suppliers and carefully manage those relationships, you can enjoy:
But how can you start building strong supplier relationships or strengthen existing ones?
A partner like CMTC can provide vital support for supplier sourcing, supplier development, and supply chain optimization for your business. CMTC’s expert consultants can implement the strategies, tactics, and technologies necessary to create an efficient, agile, and robust supply chain.