Supplier Partnerships: Your End of the Deal
PurchTips edition #166
By Charles Dominick, SPSM, SPSM2, SPSM3
Are Your Supplier Partnerships Too One-Sided?
For the last 15 years, I've heard a lot of purchasing and supply management professionals express interest in establishing "supplier partnerships" as a way of achieving their organizations' goals. However, I've seen very few of them understand that true supplier partnerships involve the buying organization helping the supplier achieve its goals, too!
So let's look at four common supplier goals and how you can help your suppliers achieve them...
Supplier Goal #1: Reduce Payment Cycle All suppliers want better cash flow (i.e., getting paid more quickly). So, in a supplier partnership, you should try to improve the speed at which your organization pays the supplier. Like any purchasing improvement initiative, understand your baseline, implement improvements, and measure the change against the baseline.
Supplier Goal #2: Increase Sales To increase sales, suppliers need to have a marketing edge over their competition. You can help a supplier partner in this regard by offering a testimonial that they can use in their marketing material and/or serving as a reference.
Supplier Goal #3: Reduce Cost & Complexity Many buying organizations request special treatment from their suppliers. Whether that special treatment comes in the form of customized reports, unique packaging requirements, or something else, "special treatment" has a cost associated with it. If you can eliminate unnecessary services that your supplier performs for you, you'll help your supplier achieve cost reductions that can be shared with your organization.
Supplier Goal #4: Increase Reliability of Sales Forecasts One thing that scares executives is having long-term revenue targets without reliable data to support them. By committing to a multi-year deal, you can increase your supplier's confidence in its future revenue targets.
By knowing your suppliers' goals and helping them to achieve those goals, you will be in a great position to get your supplier partners' wholehearted commitment to helping your organization achieve its goals.
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