Keeping supplier development in mind is key in today's digitalization era
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11 Dec Keeping supplier development in mind

In a recent article by communication strategist and journalist Poul Breil Hansen, he elaborates on how one of the most vital issues within a company, is to establish a healthy relationship with your suppliers. In fact, according to him the department of purchase should be renamed “The department of supplier development” counting in the fact that today, having a successful value-chain proposition, is equivalent to how your business thrives.

The idea of establishing a healthy relationship with you business suppliers partly have its origin in the 1983s article by legendary Peter Kraljic, director of McKinsey and creator of the Portfolio Purchasing Model.  In this article Kraljic introduces new terms and ideas such as structured portfolio analysis, category management, total spend and risk management while noticeable neglecting terms as costs and savings.

According to Kraljic companies may achieve lower costs and greater savings,  but that is due to a strategic use of the links within a business value proposition – not a result of focusing entirely on saving money.

The article by Kraljic is said to be a marker for the beginning of purchasing being recognized as a function within the chain of value, and Kraljic is later quoted saying that a great deal of his ideas are very much as relevant today, as they were in 1983.

FINDING YOUR PLACE IN THE ECOSYSTEM

In a research study from 2015 called “Supply chain management in b2b trade-companies” performed by Danish Industry, one of the key results is how important it is to strengthen the collaboration with your suppliers (thereby confirming Kraljic’s theory about the importance of a healthy supplier relationship). In the same study, Mads Thimmer CEO of Innovation Lab, elaborates on how the  age of digitalization makes it important to know where within the ecosystem your business lies: “You’re moving in sync with those in front and behind you in the value-chain. It may be fine to be good at something, but if the need suddenly changes from what you’re good at, it might hold a great risk” Mads Thimmer says.

Being able to evolve and adapt your business is important in this fast paced age, but in order to do so, it is crucial to know and be on friendly terms with every part of your value-chain. Doing this, you’ll be able to communicate new ideas and changes, and have your business benefit from the changes, instead of lacking because of them.

KEEPING SUPPLIERS IN THE LOOP

Maintaining a healthy relationship with your suppliers can be difficult in a fast paced work environment, and companies often spent important time communicating and emailing back and forth, about a certain delivery or product. At Delogue, we recognize this problem and one of our most appreciated features at our platform is the ability to easily communicate with suppliers – thereby keeping them in the loop surrounding updates and features of a certain product. All messages are logged and easily found if something suddenly should require to be looked through.

GATHERED INFORMATION

A central question that Kraljic often asks CEOs is “are you aware of the possibilities and risks your value-chain contains, and are you aware of how you are going to handle them?”

Many CEOs of today would probably have difficulty answering that question, and with good reason. Being a successful company means dealing with a lot of different people and processes, and overlooking every little detail can be very difficult to maintain. At Delogue, we believe that gathering the different departments and processes in one place is what makes for an efficient product development. We believe that by providing this platform, we are setting up the groundworks for companies to manage and overlook any compartment within their chain of value and ultimately benefiting both supplier and buyer.

According to Peter Kraljic there is good reason to emphasize the importance of a good relationship with the suppliers; ” It’s not easy to deal with, but you have to create a win-win situation, particularly when speaking innovation. Suppliers is a great source for innovation, but you get nowhere without trust.”

As Kraljnic explains, being able to trust every chain and process within your business, while using the right tools to manage all communication, is what will lead your business to prosper and evolve in the end.

TIPS ON HOW TO ESTABLISH A GOOD RELATIONSHIP WITH YOUR SUPPLIERS

  • Share knowledge and make the chain-of-value a transparent process
  • Check up on your suppliers continuously and solve minor issues before they become problems
  • Communication is key! Be sure to set the right foundations for a healthy and easy communication

Learn more about how to manage your supply chain management here.