In Suppliers We Trust
Managing supplier relationships takes work.
Spend time on any manufacturing floor and you will realize that relationships between suppliers and partners are critical. Rather than considering them as an entity outside of your organization, suppliers should be treated as trusted partners. A spirit of collaboration is the goal. Gone are the days of viewing a supplier with suspicion and secrecy. Today’s successful companies know that supplier management cannot be ignored.
Think collaboration, not isolation. Partners rather than antagonists. As an ISO article states, “The Future Belongs to Those Who Collaborate.” Don’t you want to be part of the future?
“Collaboration—defined as “working together” or “willingly cooperating”—is not a new business trend,” writes ISO’s Elizabeth Gasiorowski-Denis. “As a matter of fact, it has been around for a long time under a variety of business models, including alliances, consortia, partnering and outsourcing programs, and the increased focus on supplier relationship management.”
Relationship management is a way to go about creating this type of mutually beneficial environment. But of course a symbiotic supplier relationship takes work
Opening up your facility to supplier visits, audits, and benchmarking may be difficult or uncomfortable if you aren’t already doing these type of activities. But they are critical. As any quality professional has no doubt observed, quality issues can originate outside the four walls of your plant. Minimizing supplier quality problems is one important element of tackling quality issues before they happen. Though issues may inevitably crop up, having a better relationship can help address these faster.
On ASQ TV, Edward Cook, director, supplier quality management, Hospira Inc., a Pfizer Company, outlines why relationship management is important. It builds trust, aids collaboration, and expedites any issues or problems, Cook says. This could take the form of feedback from suppliers as well as more formal programs such as scorecards.
According to Cook, failure to understand the complete group of stakeholders is often an issue. That’s where relationship management can help reveal a complete picture of the manufacturing process and supply chain.
Indeed, Cook says that suppliers have been one of his biggest sources of feedback. Imagine getting a report card in elementary school where the teacher asks you for feedback. In the same way, a supplier relationship can be based on dialogue rather than an edict handed down from a position of authority, Cook explains. But it can’t happen without one simple factor.
“What it really boils down to is the T-word, right? Trust. If we don’t have that trust, they’re not going to give us the most open honest feedback,” Cook says. “And as we all know, the key to continuous quality improvement is open feedback, honest and genuine.”
Celebrating supplier successes is another great idea. We can all recall the time something subpar was delivered. But what about recognizing excellence? Or early deliveries?
Relationship management may take many forms. Collaborating on improvement projects is a great option as is sharing expertise with partners. Just as it takes a village to raise a child, it also takes a larger base of people to create quality products.
According to ASQ, connectedness is “a measure of how well an organization is connected to and integrated with its supply chain. To create a lean but integrated value supply chain, a strong relationship and collaboration needs to exist between both supplier and buyer. This partnership includes:
- A readiness on both sides to discuss future plans
- Willingness to understand each other’s business processes
- Commitment to share in each other’s long-term strategies
- An agreement to share in cost savings realized by any joint activities”
How can these improvements happen? ASQ suggests:
- “Eliminating waste and non-value-added processes and even operations throughout the entire supply chain
- Identifying and simplifying key supply chain processes to improve efficiency and overall effectiveness
- Rationalizing the entire supply base
- Reducing throughput and lead times and overcoming the functional silos that divide and separate companies and foster inefficiencies”
In an article for the International Journal of Business and Management, Ghaith M. Al-Abdallah, Ayman B. Abdallah, and Khaled Bany Hamdan studied this topic from the perspective of manufacturing companies in the United States, Korea, Japan and Italy.
The authors looked at supplier relationship management through the lens of five factors: “supplier quality improvement, trust-based relationship with suppliers, supplier lead time reduction, supplier collaboration in new product development, and supplier partnership/development.” Of these, the authors found that two were especially beneficial: “Supplier partnership/development and supplier lead time reduction significantly and positively affect the competitive performance of the buying firms.”
According to the paper, “Companies cannot merely rely on their internal resources and capabilities to reach superior performance. Suppliers represent one of the fundamental pillars for improving competitive performance. Manufacturing companies are strongly recommended to consider the importance of SRM [supplier relationship management] in order to attain high performance outcomes.”
Everyone wants a high-performance outcome. Why not work with suppliers to get there?