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A Roadmap for Successful Buyer-Supplier Collaborations

Are you getting what you want out of your supplier relationships? If the answer is no, you’re not alone. One out of every three procurement executives surveyed is not satisfied with his or her company’s buyer/supplier collaboration program.

Lack of interest is not the problem. Across industries, approximately 85% of buyers segment their suppliers to identify prospective collaborations. So if interest is high and collaborations are supposed to hold the key to increased profitability and more effective operations, how can businesses get the results they’re looking to achieve?

One of the major pitfalls is that many businesses create programs that are focused too narrowly on operations efficiency. Often, these standardized programs never explore shared innovation, speed to market, or improved quality. Most collaborations target the supply chain (62%) or manufacturing (47%) but overlook buyers’ marketing, sales, or business development functions.

Creating Collaborations that Work

Companies have an opportunity to turn their supplier relationships into extended enterprises. Doing so will enable innovation, drive efficiency, avoid major supply-chain disruptions, and eliminate overlapping expenditures.

The best buyer-supplier collaboration programs focus on five essential elements:

  1. Segment the supplier base. Identify those suppliers that are the best strategic partners.
  2. Build the right capabilities and organization. Partner with suppliers to analyze costs, manage quality, incorporate new technologies, enhance processes, and foster collaboration among multiple suppliers.
  3. Align benefits and incentives. A core requirement for successful collaboration is trust. Be willing to share information with suppliers and offer incentives. Set a tone of mutual interest to make the relationship more productive.
  4. Follow a structured approach to program design. Early communication from upper levels of the buying organization and strong support from corporate leadership are critical in persuading internal teams and suppliers to develop a shared vision. Use a catalyst approach to develop ideas individually, and then come together to agree on the ultimate value and set an implementation plan.
  5. Implement and manage for the long term. In addition to tracking initiatives for progress, it’s imperative that program leaders are enabled and accountable, both organizations are engaged, and governance is clear.
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