The value of healthy supplier relationships in the supply chain


Many supply chain management discussions focus on how to manage business partners in an increasingly complex and collaborative network. One important part of keeping operations running smoothly is ensuring that suppliers know what is expected of them, but it's important to keep in mind that collaboration is a two-way street. 

Building healthy supplier relationships
supply chain ecommerce salesLike any friendship, the value of a business partnership can be significantly impacted by first impressions. As Practical Ecommerce contributor Armando Roggio recently noted, setting clear and achievable goals can help suppliers plan their inventories and manage their relationships with managers. 

Another factor that can set the stage for a beneficial partnership is understanding the other company's technological capabilities and processes. Roggio highlighted the fact that companies will likely have different needs regarding information sharing. For instance, while some businesses may be accustomed to using email to send important documentation, others will have an electronic data interchange solution in place. Understanding the processes and capabilities of each supplier ensures that important data is not lost in transit. Making a strong initial effort to collaborate with business partners will open the door to advantages down the road.

"Good supplier relationships may lead to favorable prices, generous terms, improved availability and even the occasional buyback," Roggio wrote. "With these sorts of opportunities at stake, it can be very important for online retailers to nurture relationships with key manufacturers and distributors."

Benefits of a positive business relationship
While technology has allowed for greater degrees of automation in recent years, it's important to keep in mind that there are still people running things throughout the supply chain. As Roggio noted, it may be tempting to pass blame when a problem occurs, but this may put partners on the defensive. A better approach would be to work together and identify the actual cause of an issue so that a true resolution can be reached.

Companies that foster this level of trust can expect to see widespread improvements. For instance, Roggio suggested that this will make partners more willing to accept training or suggestions for new IT services

"Once you have a reputation of paying on time, providing orders in the proper format, and being friendly with the supplier's representatives, you can start to train the supplier to give you what you need," Roggio wrote.

It's also worth noting that creating this kind of relationship can foster greater levels of B2B integration. Although it's tempting to focus on the technical challenges when orchestrating such a project, partners also have to be willing to adjust their processes and share information. Otherwise, it is impossible to achieve the level of visibility required in today's competitive supply chain management environment.

A recent Forbes article from UPS explored the impact that technology has on supply chain risk, noting that one feature in particular that can reduce risk significantly is real-time inventory tracking. While it does require a high level of integration throughout all partners, it's one of the best ways to manage demand. For supply chain managers on the go, it may also be helpful to look for software that runs on mobile devices.

For instance, the article highlighted the case of an employee attending a trade show. With the ability to see inventory from a mobile device and in real-time, he or she could still make orders as supplies were running low. This would eliminate the risk that a shortage would go unnoticed and ensure that customers continue to receive their products in a timely manner.

Good supplier relationships are the key to order management and supply chain success, see what next-gen SCM really means: