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Procurement Strategy – Supplier Relations

The fourth step in the building of an effective procurement strategy is developing meaningful supplier partnerships. In supplier partnership programs, businesses must work with their suppliers to identify shared goals for tactical performance as well as strategic issues such as linkage of supplier product design and manufacturing processes, development of continuous improvement programs, and application of technology.

The objective of this step is to build a collaborative culture between buyers and suppliers where the supply channel acts if it were a single, seamless supply engine.

Determine Level of Current Supplier Relationships

This activity is concerned with the identification of the strengths and gaps in a company’s relationship strategy with its supply partners. Among the issues are defining shared goals for tactical purchase order and receiving performance as well as strategic issues such as linkage of supplier manufacturing processes and procurement requirements, identification of out-of-bounds situations, development of continuous improvement programs, and the application of technology.

Apply Collaborative Strategies to Enhance Relationships

This activity focuses on the enhancement of relationship-building strategies such as identifying opportunities for collaboration on joint product design, education and training, computerized networking, and agreement on common performance measurements such as on-time delivery and quality.

Establish Evaluation and Certification Targets

In this activity use of evaluation and certification programs enable companies to enforce the creation of product quality databases and assurance methods that provide documentation of quality levels. Another tool is the use of supplier rating systems based on actual supplier performance. Finally, suppliers must agree to submit their quality management systems to customer audit. The goal of the audit is to verify supplier conformance of productive process and output to meet the specifications and delivery needs of the purchaser.

Determine Roles of Planners and Buyers

This step is concerned with actualizing an effective supplier management program that contains multiple levels of collaborative communication: business review meetings, supplier collaboration, and supplier scheduling. A partnership communications structure that includes all three levels ensures that purchasers and suppliers will receive the necessary flows of information. Together, purchasers and suppliers can determine the participants, frequency, the data to be shared, and the output formats to be used at each level.

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