A company’s supplier collaboration is a vital part of its competitive advantage. It can provide unique access to innovative technology, R&D capabilities, and other assets that are not readily available in the market or within its own internal capabilities. However, supplier collaboration is not without its challenges and many initiatives struggle to deliver on their intended benefits.
Often, the primary barriers to successful supplier collaboration are related to culture and communication. Most buying companies need to create the right cultural environment and engender a strong level of trust to effectively collaborate with their suppliers. In many cases, this requires a change to how the organization normally operates with its suppliers. The procurement department may need to solicit the involvement of individuals from other departments that are not typically involved in supplier relationships. It is essential that these individuals understand the benefits of supplier collaboration and the value it will bring to their areas of expertise.
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Another key barrier is a lack of genuine commitment to the supplier collaboration initiative. It is common for the enthusiasm of participants to wane as other priorities and concerns emerge. It is important to communicate regularly with all stakeholders and reaffirm the importance of the program.
Lastly, a high-performing supplier collaboration model is supported by open and transparent communication with all partners. This will help to ensure that the supplier is able to share critical information with the buying organization, and that a consistent approach is used in cost modeling and other gain-sharing arrangements.