Developing and managing effective supplier relationships

I am particularly fond of this topic in the CPSM exam, because it is close to my research interests and PhD dissertation on Innovation Generation in Supply Chain Relationships.So it is wonderful that the topic finds a place in the 1-F-2 section.

Generally speaking suppliers tend to be under-utilized resources in organizations despite their knowledge,ability and enthusiastic willingness to help the mission of the buying firm. This help is not merely to step up with additional supplies, in an emergency but to provide innovative ideas and solutions for the client. Most supply managers tend to call on suppliers for quotes, expediting supply, changing supply quantities on short notice. Rarely do supply managers draw upon the knowledge and skills of the supplier to promote innovation and new product development in their mainstream operations. Here are some important points that the section covers to promote leadership among supply managers on this critical topic:

• Confidentiality of Intellectual Property: Most suppliers tend to be long term suppliers and it becomes easy to share information about each others intellectual property particularly when mutual innovation is involved. Explicit agreements,training to ensure that such proprietary information or knowledge is not shared with competitors needs to be articulated for both parties.
• Improving trust between suppliers and your organization: Trust improvement is necessary if you want the supplier organization to deploy mental band-width to your challenges. Simple steps to acheive this trust include:
•  Meetings between different levels of supplier including top managements, your user departments and your marketing folks can help. Because all are trying to serve your customer.
• Timely payment is something that is simple to do but just gets missed. It can have an enormous impact on supplier trust and motivation. If your finance folks want to pay 30 days later than agreed, just tell your supplier and frequently they will agree and bless you for helping their cash flow planning!
• Supplier survey,training and feedback is important as you try to segment your suppliers by potential and ability. Minor investments in these areas can reap big dividends for your organization.
• Early Supplier Involvement (ESI) is important for innovation, as that helps in the new product development process when you are working with existing core technologies.

Also see Innovation in the B2B and Supply Chain : You are less locked-in than you think.