Jun 22, How supply chain complexity affects buyer-supplier relationships (JBL) article explain the real-world implications of their academic research. account how that pressure might affect relationships with the partner in other. Supplier relationship management is used by supply chain professionals involved in of its profitability, but its main electronics supplier has a huge impact. Feb 21, Supplier Relationship Management (or SRM) came into life in when risk and profitability impact upon a company and devise supplier I am a researcher into supply chain management and corporate procurement.
Organizations need more flexibility in their supply chains and should seek stronger partnerships with their suppliers, moving away from transactional relationships based on costs and delivery times, and focus more on long-term mutually beneficial relationships. SRM software, much like a CRM system allows supply chain personnel to keep track of supplier interactions and address concerns early. This type of system can also help organizations understand when their suppliers are undergoing change or hardship, and offer them an opportunity to step in and help, or provide them with enough time to source from different suppliers.
Manage working capital To establish and maintain leadership, organizations must innovate.
This requires strong supplier relations, built on trust as most times delaying payment can erode partnerships, affect terms of payment, and cause less willingness for collaboration. These strategies are even more beneficial in the retail space where suppliers consider special arrangements on payments in exchange for better shelf space and product visibility. Set clear expectations and KPIs Suppliers are not mind readers; their success relies on communicating with their customers, understanding their demand needs, and receiving honest feedback.
Organizations that rely on hundreds, maybe thousands, of suppliers to fill demand find themselves reacting to supplier behavior rather than anticipating concerns and preparing ahead of time. A comprehensive supplier management strategy helps organizations arrange suppliers based on different tiers of importance and reliability.
Suppliers should be held accountable for their promises; all communications, formal and informal should be properly logged and followed up with. It is unwise to trust a supplier with more work or a better project, if they have repeatedly failed to meet deadlines in the past.
Organizations should keep detailed information on supplier communications, contracts, and improvement based on their internal key performance indicators.
It is important that these characteristics are shared with suppliers and used to measure their ability to improve on these indicators. Find opportunities and improve supply chain sustainability Consumers are becoming increasingly more concerned with how their products are manufactured and sourced. According to The Nielsen Company: In the past we have seen numerous examples of global leaders fail consumer expectations.
These organizations depend on a vast network of global suppliers to bring their products to market, but in the eyes of consumers it is their responsibility to ensure that their practices have minimal impact. To meet the growing demands of customers, organizations must work closely with suppliers, conduct regular audits, and analyze findings. Managing supplier relationships strategically allows global companies to set standards and utilize existing assessments such as the Higg Index. To reach sustainability best practices, communication with suppliers must be collaborative and transparent with stated common goals and clear ability to measure efforts.Supplier Relationship Management - Process & Tools in Supply Chain Relationships - AIMS Lecture
This practice is supported by a dynamic SRM strategy that retains information that can be used for analysis. Recent empirical results, however, have called this assumption into question, and our work is among the first to explore the reasons behind differences in behavior.
We propose that buyers and suppliers interpret multimarket contact in different ways. Suppliers might see it more as a successful lock-in of the buying firm and become bolder in their demands.
The buying firm, on the other hand, might feel increasing dependence and supply risk. If the supplier defaults, it will send large shock waves into the buying firm's operations.
The buying firm might thus become more cautious in putting pressure on the supplier and be more concerned about the stability of the relationship. Our findings are consistent with these thoughts, but as I said, we are just beginning to understand these mechanics. We have launched additional research to look deeper into the differences in behavior between buyers and suppliers, and we invite your readers to share their thoughts, experiences, and examples on this topic with us.
Why You need a Supplier Relationship Management Strategy
Just drop us an e-mail! Readers who are interested can contact Dr. Your research relied on "vignette methodology" that asked participants to respond to hypothetical circumstances. Tell us about one of the vignettes you used. The big advantage of this method is that respondents actually make a decision inside the context of the vignette scenario.
By slightly varying the scenario among participants, we can find out how these variations influence decision making. In our research, for example, we varied the degree of multimarket contact. Some participants received a scenario description that included the following: Another group of participants received the following description: You know of four other business units that also have established buyer-supplier relationships with the SELR Group.
How can supply chain executives apply your findings about power and multimarket contact? The key implication is that you want to be fully aware of all the exchanges you have with each of your suppliers. That is, you need to be very well coordinated internally. You also want to be very controlled in how you display this coordination in negotiations, because sometimes it can be better to show that you are aware of the entire relationship and sometimes better to pretend that you are only interested in this single contract.
Further, you want to get a good sense of how coordinated the other party is, and whether they actually have transparency. How do you improve internal coordination? Like in every change effort, it is important to have top management on board.
How supply chain complexity affects buyer-supplier relationships
In sourcing committee meetings, top management should regularly question sourcing decisions and ensure that all relationships with the supplier are taken into account. Further, incentives for coordination need to be aligned. If a purchasing manager's bonus only depends on her own cost savings, there is little chance that she will spend much time talking to purchasing colleagues in other divisions or category groups. Integrated IT systems can be another huge enabler, and many firms are already working on improving purchasing transparency in their systems.
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