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Taking supplier collaboration to the next level
16 February 2023
Supply chains, particularly those in the manufacturing and assembly sectors, that rely on complex and global networks of suppliers, face various obstacles, such as supply chain disruptions, demand volatility, supplier reliability, logistical challenges, Inventory Management issues, data visibility and accuracy, and daily issues involving Buyer-Supplier Collaboration.
Many of those supply chains are reactive by nature, always chasing suppliers, deliveries, parts and line shutdowns. A reactive supply chain is a supply chain lacking supply chain visibility tools and is a supply chain that responds to events and changes after they occur, rather than anticipating and proactively planning for them. The focus is on addressing issues as they arise rather than using advanced analytical tools to prevent or mitigate potential problems. This approach is often characterized by a lack of real-time visibility into suppliers manufacturing and PO status, limited collaboration with suppliers, and a reliance on manual processes and the lack of a centralized supplier data management hub.
By contrast, a proactive approach to supplier collaboration involves actively engaging and working closely with suppliers to enhance mutual benefits and achieve shared goals. This approach goes beyond traditional buyer-supplier relationships and focuses on building strategic partnerships that foster innovation, efficiency, and long-term success and helps companies mitigate risk in the end to end Po life cycle.
Transforming the organization supplier’s collaboration and purchase order management methodology to a proactive approach is the first vital step that takes supplier collaboration to the next level and involves moving beyond basic transactional relationships by creating a collaborative and intelligent procurement ecosystem where both parties contribute to each other's success and visibility and traceability becomes a shared endeavor.
There are many advantages when transforming your supply hain from reactive one to a proactive one based on supplier management best practices methodology, following are some ways to start the journey:
- Shared Risk Management - Working with suppliers to identify and mitigate risks in the supply chain, and establish contingency plans to address potential disruptions.
- Transparent Communication and Information Sharing - Foster transparent communication by sharing relevant information on market trends, demand forecasts, and upcoming changes in advance. Open communication builds trust and allows both parties to make informed decisions.
- Technology Integration and supplier data management - Implement technology solutions that facilitate real-time communication, data sharing, and collaboration. Impliment a supplier-friendly supplier portal to create an open, easy-to-use, secured web-based channel that enables continuous access, communication, and transparency between suppliers and procurement and supply chain management teams, with a high level of real-time collaboration, visibility, and traceability.
- Regular Relationship Assessments - Conduct regular assessments of the supplier relationship. Solicit feedback from both parties to identify areas for improvement and address any concerns proactively.
- Performance Evaluation - Conduct regular performance evaluations based on agreed-upon metrics that are visible through an online real time vendor scorecard.
- Feedback - Provide constructive feedback and recognition for achievements, and work collaboratively to address any challenges or areas for improvement.
- Training and Development - Invest in training and development programs for both your organization and your suppliers. This ensures that everyone involved has the necessary skills and knowledge to meet evolving demands and industry standards.