Let’s Get Together: 3 Tips for Supplier Collaboration

Heavy is the head that wears the crown within the supply chain. Regulations from the FDA have made manufacturers solely responsible for supplier quality concerns and product recalls, and an alarming forty-two percent of recalls are caused by supplier-related issues. So we know by now that getting the vendor selection right is important, however the most important part of the relationship is what is called the “maintenance” phase. This is where most of the transactions occur and when most of the risk is present in the relationship. These transactions are still handled using phone, fax, email, paper, e-forms and other uncontrolled methods. To combat that lack of control, the industry is seeking the next killer app. It needs to satisfy the control, it needs to be easy and it needs to be universal. The solution is collaboration; it is fundamental and the technology to enable it already exists. The effort however like anything else worthwhile is in taking the first step.
 
We have compiled a few important factors to consider when implementing a culture of collaboration with your suppliers:
 
1. Quality Assessments
It is vital to keep a close eye on the quality assessment from the start – before it becomes an even bigger issue down the road. It is important to understand how both parties approach quality. Do both manufacturers and suppliers think about quality in the same way? What type of resources do they have available to put these values into action? Manufacturers and suppliers whose attitudes align around quality are more likely to have a successful relationship.

2. Communication
Communication is crucial when developing collaborative relationships with suppliers, especially in relation to quality incidents. For example, when a quality incident occurs on a run of materials, manufacturers want to hear about it even if it doesn’t affect their specific batch. Over-communication from suppliers will give manufacturers the “fuzzy feeling” that vendors are just as concerned with quality as they are.

Manufacturers should remember that suppliers are communicating with a wide variety of companies, so the best way to ensure consistent communication is to simplify the process. Instead of using a combination of phone calls, emails and other forms of communication, using one universal portal for all communication will streamline the process and keep everyone organized.

3. Strategic Investments
Not all suppliers are created equally. In an ideal world, manufacturers would have enough time and money to invest in relationships with each supplier. Since this is most likely not the case, manufacturers should start by looking across the supply chain to identify low, medium and high risk vendors. For example, sole source providers that deliver a material critical to the overall product are of a much higher value to the manufacturer.
 
Typically, the top 20 percent of suppliers, based on spend, will have a closer relationship with the manufacturer. This is not surprising, because manufacturers are more likely to invest time in developing a collaborative relationship with a supplier they are already heavily financially invested with. By first focusing on top-tier suppliers, manufacturers can then apply learned best practices to other suppliers across the supply chain.
 
It is important to keep in mind that collaborative relationships should be beneficial for both parties, working together for a common goal. Collaboration is driven through culture: if manufacturers treat suppliers like a partner, then suppliers will act like a partner throughout the business process. By identifying suitable suppliers, evaluating commitment to quality, communicating regularly and investing in strategic relationships, manufacturers and suppliers can collaborate effectively to drive consistency in the supply chain.