Wednesday 16 December 2015

Significance of Healthy Supplier Relationship

Authored by Usama Shahid

In most client-provider partnerships, procurement departments generally maintain professional working relationships with suppliers that border on being overly formal.But such formality can hamper the good communication and trust needed to bring about long-term value to both the supply chain and organization.

To create the best partnership possible, procurement leaders should look to personal relationships for guidance. Communication, responsibility and patience are tools generally valued only in terms of personal relationships, but procurement teams can apply these same tools to reinforce supplier relationships.

Here are four tips for improving relationships with your suppliers:

1.Create channels for consistent communication Communication is the key to any healthy relationship, and it’s a good point to keep this in mind when dealing with suppliers. Communication will create transparency on both sides of the channel and prevent hiccups or missteps, like incorrect inventory count or missing purchase orders. Having the right tools in place that allow both internal and external teams to quickly communicate and share documents and other information will help facilitate a more transparent, even-sided conversation.

2. Dish out blame evenly Pointing fingers during a dispute is instinctual, but it’s important to distribute blame on all sides. An easy way to ruin a relationship with a supplier is to place all the blame on their processes when things go awry. When communication isn’t clear and dilemmas occur, it’s important to look at the situation from both sides of the transaction critically. Opening the floor to a conversation around the issue and realizing that both sides are likely at fault shows respect, translating to a better relationship and smoother future processes.

3. Know you aren’t the only client Procurement officers know what it’s like to deal with multiple customers and suppliers on a daily basis, so this same mentality should be applied to the supplier relationship. Suppliers aren’t just working with your company, so give them the benefit of the doubt if your needs aren’t instantaneously met at all times. Procurement departments should assert priority to suppliers without over communicating demands. This type of mutual understanding will create natural rapport and motivate suppliers to spend more time working with your company.

4. Create transparency through technology Trust is critical for a constructive buyer-supplier relationship, and the best way to build trust is to establish transparency. By using a fully integrated procure-to-pay system, procurement is able to access real-time information that they would typically have to request from their supplier. This also saves time, as procurement no longer has to try to contact a supplier by phone or email. By simply logging into a platform, they can get what they need right then and there. Technology also simplifies basic tasks like ordering more supplies and renewing contracts. Digitizing key processes like these eliminates the chance of error and creates a satisfactory transaction system for both parties.

Procurement leaders have to establish favorable relationships with their suppliers to ensure quality services and efficient processes. By having the right tools in place and practicing consistent communication, responsibility and patience, buy-side organisations will create more effective relationships with their suppliers, propelling efficient and well-run operations.