Why Now is the Time for a New Approach to Supplier Relationships


When the COVID-19 pandemic first struck, one of the first things to get hit was supply chains. Across the globe things were not moving as quickly as before…and companies recognized that they needed more real-time information about their suppliers and more options for their supply chain.


Even before the pandemic, the supplier managers I speak with were eager to have both increased collaboration and real-time performance analysis of their key suppliers. The pandemic simply accelerated this need—and lessened some of the hurdles that had been getting in the way of making it happen.

Now truly is the perfect time to make long-lasting changes to your approach to supplier relationships. Here are three reasons why:


1. Collaboration is quickly changing the way we live. We collaborate to find the best route via Waze or the best place to eat via Yelp. Likewise, collaboration tools have become vitally important in a workplace where many if not most employees (in your organization and in supplier sites) are no longer physically on site. Among other things, collaboration tools improve communication, productivity and job satisfaction—and make it easier to get things done. Breakthrough practice: Today many company cultures are in flux as more employees work from home and management looks at new technologies to support these changes. Emerging collaboration technology presents an opportunity to enhance supply management productivity and enable greater collaboration among buyers, stakeholders and suppliers. You can now adopt a supplier collaboration platform that has the social features that we have grown accustomed to on social media. For example, a buyer placing orders for rotating equipment can learn about supplier issues being experienced by other sites. She can even keep tabs on various suppliers’ KPIs by “following” key suppliers in the rotating equipment space.


2. You need real-time information. Right now, market conditions are more dynamic than ever. Risk will exist tomorrow where it did not exist yesterday. To protect your business you must know more about your suppliers and the risks they might have. And you must have back-up plans in place, especially if your suppliers are located overseas. For example, one of my clients was recently caught off guard when a capital equipment manufacturer that had been serving them well for decades suddenly couldn’t meet delivery dates. To make matters worse, some sites in other regions were placing orders with this supplier months after delays were already appearing at sister plants. Your corporation might have critical supplier information such as previous sourcing results, past issues and resolutions, and prior risk analysis. But if this critical information is siloed in many separate systems and inaccessible to an individual supply manager, it does not do you any good.


Breakthrough practice: The traditional suite of spend analysis, sourcing and contract management tools are useful. However, now it’s time to integrate this data into a supplier management hub where you can also analyze the data. The supplier hub can give supply managers the real-time insights they need to develop the right strategy and avoid potential supplier hazards.



3. It’s time to change company cultures. Over the last 17 years, my consulting clients have typically been large manufacturing companies in the United States, Europe and Japan. These organizations tend to be complex and slow to embrace change. Many of their large global suppliers are similarly challenged. The pandemic presents an excellent opportunity in this area.


Breakthrough practice: The current environment has made it crystal-clear that collaboration is a key business strategy for improving the supply chain. Leadership needs to embrace this and demonstrate its truth with words and actions. One example might be hosting an annual (virtual or in-person) forum for strategic suppliers to join and brainstorm improvement ideas. All suppliers have opinions on how to improve your business, but they are rarely asked for them.


The future presents continued challenges related to globalization, time commitments and information hurdles. But strong leadership and new technology are about to change the supply management function for the better yet again.


About the writer: Sean Harley is the founder and CEO of LUPR Inc., a collaboration platform that helps procurement teams manage their suppliers’ performance.



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