It’s not an exaggeration to say suppliers are the center of the supply chain’s success. No matter what industry you’re in and the products you sell, you won’t accomplish much without collaboration with suppliers.
Supplier collaboration is among the top priorities for many organizations in today’s growing on-demand economy, where supply chain competitive advantage is a value creator.
What Is A Supplier?
A supplier, also known as “vendor,” is a person, organization or business that provides goods or services to another entity. Their role is to supply a high-quality product or service at the best optimal price to buyers.
The Importance of Suppliers in Business
Suppliers have a significant impact on every stage of the product life cycle. It’s no doubt that the relationship between suppliers and buyers is critical for a solid business foundation. Suppliers play a crucial role in how fast your business grows and maintains your success. Hence, it’s vital to build a strong relationship with suppliers and treat them with utmost respect and loyalty.
Benefits of Supplier Collaboration
Major buyers with advanced procurement practices have been actively looking for ways to build trust and cultivate supplier relationships. Strong collaboration could create significant value and help the supply chain become more resilient.
A survey from McKinsey of 100+ large organizations in multiple sectors has shown regular collaboration has higher growth, lower operating costs, and greater profitability than their competitors.
How To Improve Supplier Collaboration – From Supplier Perspective
Despite value at stake, many procurement professionals still face challenges integrating suppliers into their overall procurement strategies due to ineffective communication, lack of transparency of shared values, and misalignment of goals.
In this article, we list some steps to tackle this issue that you should take into consideration.
Supplier Collaboration is Not Simply Cost-Based:
Successful supplier relationships are not transactional but a close, collaborative partnership. The strategic procurement approach goes above and beyond demanding cost reductions. As an organization is near-transparent by openly sharing their challenges, suppliers feel like they’re a part of the team and more comfortable sharing their insights that potentially deliver results far beyond buyers’ expectations.
Regular Communication From The Early Stages:
Regular communication creates a shared understanding, which avoids confusion and disagreement. Communication is a two-way street, so it’s critical to achieve effective communication by regularly checking in with your suppliers and keeping them engaged in every stage of the project.
SupplierGATEWAY’s clients have utilized QuickConnect Matchmaker tools to optimize their effective communication with potential and existing suppliers. Procurement professionals use our tool to screen and initiate a call online or in-person for a new project.
Collaboration is a Win-Win Strategy
A successful collaboration should be a win-win for both parties. Understanding and facilitating their needs while safeguarding your benefits is the smart way to gain a long-term relationship, which procurement professionals tend to forget.
Similar to buyers, financial stability is one of their priorities to maintain their business success and provide the highest quality products and services to you. Cash flow is the heart of a supplier’s business. Over 20 years of experience working with buyers and suppliers, we found that the short payment term has proven practical and appealing to suppliers. It allows them to reserve cash to pay for the things they need to run the business.
A study from Xero has revealed that 70-80% of businesses offer payment terms that have two weeks or less. Besides, over half of these businesses request payment within 7 days.
SupplierGATEWAY’s virtual payments enable buyers to pay suppliers via automated delivery of virtual cards and earn 1.5% or more cash back for every transaction, no matter the size.
Streamline New Opportunity Posting:
All that suppliers want is to have more buyers. To achieve that goal, they have to simultaneously outreach and keep an eye on new opportunities from multiple buyers, which is not easy to manage. As a buyer, keeping them in the loop with this easy-to-use tool is the best way to attract the most talented suppliers into your projects.
SupplierGATEWAY’s opportunity posting tools in the sourcing bundle streamline that process and have proven effective for suppliers to keep informed of new opportunities in our buyer network.
Leverage Supplier Management Software
It can be a significant challenge to integrate a software-centered approach into your procurement practices, especially considering you may have hundreds or thousands of suppliers. The power of technology simplifies your efforts by delivering turnkey ready to use systems for tracking supplier data, purchase orders and their performance all in one place. What you need to focus on primarily is how to build collaboration momentum with suppliers.
Supplier management software also enables suppliers to effectively manage their lower-tier suppliers and reporting, which gives buyers more control over the lower-tier supplier’s data and ultimately lowering costs and improving quality.