A recent technique for better managing supply chain systems and driving long term growth is Strategic Relationship Management, which is based on the concepts of adding value to relationships with suppliers and utilizing communication techniques and management tools to align interests. In order to obtain the maximum possible benefits from Strategic Relationship Management, we have outlined a series of steps that lay a solid foundation and set strategic direction for the future and continues to drive internal and external processes while delivering benefits to both the buyer and the seller.
Step 1: Understanding the Suppliers
One core area that is often overlooked is the supplier’s business model and strategy. A supplier is more likely to build a constructive relationship with an organization that has similar aligned interests. For example, a supplier known for maintaining quality and a supplier who is heavily cutting costs will have different modes of operation and business practices. Understanding the supplier in depth and knowing their goals is helpful in keeping the relationship productive over a long period of time.
Step 2: Supplier Screening and Segmentation
Strategic relationship management techniques call for supplier screening and segmentation based on how critical they are in day to day operations. Understandably, relationships with critical suppliers tend to be more heavily invested in than relationships with transactional suppliers. Segmentation and screening allows managers and executives to judge and build relationships based on the contributions of each supplier in the success of the organization.
Step 3: Strategic Analysis of the Supply Chain
A complete analysis of the entire network of suppliers can help establish focus on areas that need attention. It can also serve to provide alternatives in the event of an unforeseen emergency and even predict supply disruptions.
Step 4: Cultivating Collaborative Partnerships
Success in business is not possible without collaboration. Supply chain managers must pay attention to developing mutually beneficial relationships with their suppliers. It is important to consider future goals and upcoming engagements during this process and apply networking skills to the best use.
Step 5: Communication
Strategic relationship management heavily relies on communicating with suppliers in order to mutually define common objectives. Open channels of communication also promote a continuous flow of information and real time updates which can help provide strategic depth to supply chain management.
Step 6: Identifying Meaningful Key Performance Indicators
By identifying key performance indicators or KPIs that are meaningful to the suppliers, it is possible to improve the entire supply chain network. Once suppliers are involved in KPI measurement, their contributions towards ensuring deliverables and contributing towards future growth continue to increase.
Step 7: Commitment to Change
Strategic relationships heavily rely on foresight and a thorough realization of adopting changes as they come along. Strategic relationship management also counts on buyers and sellers to mutually agree to ongoing change and adopt required measures to continue expanding strategic partnerships.
Managing supplier relationships through strategic relationship management has proven successful throughout the world. By applying these 7 key steps, you can help your organization get a head start and stay on top of the competition, and achieve a number of benefits including:
One core area that is often overlooked is the supplier’s business model and strategy. A supplier is more likely to build a constructive relationship with an organization that has similar aligned interests. For example, a supplier known for maintaining quality and a supplier who is heavily cutting costs will have different modes of operation and business practices. Understanding the supplier in depth and knowing their goals is helpful in keeping the relationship productive over a long period of time.
Step 2: Supplier Screening and Segmentation
Strategic relationship management techniques call for supplier screening and segmentation based on how critical they are in day to day operations. Understandably, relationships with critical suppliers tend to be more heavily invested in than relationships with transactional suppliers. Segmentation and screening allows managers and executives to judge and build relationships based on the contributions of each supplier in the success of the organization.
Step 3: Strategic Analysis of the Supply Chain
A complete analysis of the entire network of suppliers can help establish focus on areas that need attention. It can also serve to provide alternatives in the event of an unforeseen emergency and even predict supply disruptions.
Step 4: Cultivating Collaborative Partnerships
Success in business is not possible without collaboration. Supply chain managers must pay attention to developing mutually beneficial relationships with their suppliers. It is important to consider future goals and upcoming engagements during this process and apply networking skills to the best use.
Step 5: Communication
Strategic relationship management heavily relies on communicating with suppliers in order to mutually define common objectives. Open channels of communication also promote a continuous flow of information and real time updates which can help provide strategic depth to supply chain management.
Step 6: Identifying Meaningful Key Performance Indicators
By identifying key performance indicators or KPIs that are meaningful to the suppliers, it is possible to improve the entire supply chain network. Once suppliers are involved in KPI measurement, their contributions towards ensuring deliverables and contributing towards future growth continue to increase.
Step 7: Commitment to Change
Strategic relationships heavily rely on foresight and a thorough realization of adopting changes as they come along. Strategic relationship management also counts on buyers and sellers to mutually agree to ongoing change and adopt required measures to continue expanding strategic partnerships.
Managing supplier relationships through strategic relationship management has proven successful throughout the world. By applying these 7 key steps, you can help your organization get a head start and stay on top of the competition, and achieve a number of benefits including:
- Reduction in cost by sourcing and shipping products from a single source
- Improved standards of production and delivery creating a better impact on end users and improving business standing among the client base
- Reducing the overall risk and providing enhanced risk management opportunities
- Contributing to more efficient management throughout organizations
- Building collaborative partnerships to fuel future growth and innovation
