Blogs

Supplier Collaboration: A How to Guide

07 June 2024

The quality of supplier collaboration can mean the difference between an efficient supply chain and a poorly executed one. Improving this process can only start when there’s a strong commitment from supply chain partners to work as a team.

Per Mckinsey & Company - Taking Supplier Collaboration to the Next Level: "Companies with advanced procurement functions know that there are limits to the value they can generate by focusing purely on the price of the products and services they buy. These organizations understand that when buyers and suppliers are willing and able to cooperate, they can often find ways to unlock significant new sources of value that benefit them both.…work has shown that supplier collaboration really does move the needle for companies that do it well. In one McKinsey survey of more than 100 large organizations in multiple sectors, companies that regularly collaborated with suppliers demonstrated higher growth, lower operating costs, and greater profitability than their industry peers."

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In our 35 years of supplier management experience, we at IDAS.AI, have learned that increasing visibility and traceability with suppliers is key. That’s why we put into practice the phrase we so much believe in: "Communication. Communication. Communication. Don’t tell them, show them.” When we provide support with action, we can help achieve better supplier collaboration.

Would you agree that supplier collaboration is key? Would you take steps to improve yours?

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How to Set, and Achieve Collaboration Goals with Suppliers

The first stage in achieving supplier collaboration is defining both strategic and tactical goals.

    Here are a few strategic goals:
  • A. Make your suppliers a strategic partner who can help create better competitive differentiators
  • B. Synchronize expectations to ensure the right materials are available at the right time and location
  • C. Drive synergy and create a holistic relationship

    Here are a few tactical goals:
  • A. Maintain required OTD levels
  • B. Maintain required PPM levels
  • C. Maintain flawless daily communication

So how can you better collaborate with your suppliers in your workday?

    This is our 3-step approach:
  • Step #1: Increase visibility and traceability with your suppliers by using online tools like user-friendly web supplier portals for on-time PO confirmations. This will also help communicate accurate changes in your requirements in real time, enabling all sides to adjust to constantly changing demands during times of crisis.
  • Step #2: Obtain accurate WIP (work-in-progress) and stock level quantities from your suppliers and manufacturers. This will help you identify and analyze any potential shortages that may lead to line stoppages while also immediately fulfill requirements that arise from your manufacturing sites when needed.
  • Step #3: Share as much information with your suppliers as possible. Send forecasts, news updates, and accounts payable information with your supplier online. This will increase supplier participation rates and overall information sharing.

    • The bottom line: Be traceable. Don’t tell them, show them!


    In our next blog we will look at how to keep it collaborative with suppliers...

If improving supplier collaboration could improve your business, would you try a proven approach?

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