Vendors are an important part of the supply chain of any business reason being they play an essential role in the failure or success of the business. Therefore, it is of utmost importance to develop collaborative relationships with them.
When dealing with major projects, you want to have people who don’t just want to see the job done but can also be accountable and take ownership of their work. However, since the vendors are not part of your organization, it may prove difficult to get the commitment you want since you don’t have authority over them and their employees.
Having a vendor agreement form in place is a great place to start and you should always make sure to keep a signed copy during all transactions. However, there are other ways that you can ensure that your supplier relationships are excellent. Knowing why supplier collaborations fail in the first place is the beginning of ensuring that you know what to avoid when building supplier relationships. In this article, we look at the best ways to collaborate with your vendors efficiently.
Steps to developing supplier collaboration
1. Strategic alignment
The first step to developing vendor collaboration is to clearly define what your organization is looking to achieve through the collaboration effort. It requires a dedication of both resources and time. When you have a strategic alignment in place, objectives and targets set in a formal collaboration are met therefore bringing value to both your company and your supplier. Enlighten your suppliers on the measures they should take to ensure that the data and information you will share with them are protected. Your supplier should be able to demonstrate a high level of security within their company before you hire them for a project.
During strategic alignment, communicate your values and goals and ensure that you pick a supplier with similar goals and values. Failure to do so may prove challenging to have a working relationship with your vendors and even damage your brand.
2. Cross-functional communication
Just as you will need your vendors to keep you informed of the progress of your projects, you need to avail any information you feel will improve the delivery of tasks freely. You can achieve this by establishing regular communication. You can request that your vendor make a phone call twice a week and drop you a mail every couple of days. You can also make it a habit to meet your supplier face-to-face occasionally. This will open door to trust and open communication. This will ensure that your supplier can communicate any news to you without fear of bias, be it good or bad news.
Your supplier should also avail information on performance evaluation which you should carry out periodically during the projects. This ensures that should things not be following the laid down procedures, you can take a step back, evaluate, continue or suspend your supplier. However, for communication to be effective, ensure that there are designated managers for specific suppliers at the very beginning of the projects.
3. Accountability
Just like cross-functional communication, your supplier collaboration should be full of accountability. Have two-way scorecards whereby you and your supplier let each other know if you are meeting the goals effectively. Introducing clear accountability structures at the very beginning of the collaboration will ensure that outcomes are significantly improved. Establish timelines and be held to them.
Create project milestones where you correlate payments once they’ve been reached. Be open to creating new parameters since project scopes change. When this happens, have new parameters in a place where you pay for work done and change the order of work respectively. Communication is fundamental to ensuring projects keep moving forward. True collaborations have no finger-pointing.
4. Value sharing and creation
Suppliers and buyers collaborate in projects due to the aspect of shared value. However, most companies need to improve when it comes to keeping track of the impact vendor partnerships has beyond the element of cost reductions. Have a strategy in place where you openly discuss costs with your suppliers. Have a sit down once a week with your supplier partners where you discuss cost reduction opportunities. You can also put in place performance-based incentives for your suppliers where you award them with either another project or something meaningful.
5. Trust
When everything else is said and done, you can’t form meaningful relationships with your suppliers if there is no trust. You trust your suppliers to deliver as promised and they trust you to make payment once the completion of the project is done. Therefore, building trust with your suppliers is core to ensuring the wellness of your business. To build high levels of trust with your suppliers, you need to have a deep understanding of their business and yours. A great way to build trust is by having an exhibition with your suppliers whereby you share what projects you will be working on and allow them to come up with solutions. This will enable you to create a trust-based forum whereby suppliers have access to your ideas and projects, therefore, accelerating innovation.
Final Thoughts
Supplier collaboration will ultimately require a commitment of resources and time. With today’s downsized economy, it is extremely important to build collaboration with suppliers to achieve excellence. You must be willing to do things differently to effect needed change and improvements in your organization. To foster true supplier relationships, your leadership skills must also be impeccable.
This article has dived into the best ways to collaborate with your vendors efficiently which are:
- Strategic alignment. Ensure that your goals and values are clearly defined and that you pick a supplier with similar values and goals.
- Cross-functional communication. Ensure that communication lines are always open between you and your suppliers to ensure a smooth working relationship.
- Accountability. You and your suppliers should be willing to be held accountable for everything, be it bad or good.
- Trust. Form meaningful relationships with your suppliers by ensuring high levels of trust between your organization and them.
