Managing supplier relationships used to be a zero sum game. Most companies focused on short terms goals where price was the main focus. Bullying suppliers were commonplace in some organizations. Employees took great pride in "facing down suppliers" and relationships were viewed on "how much money we will make". However, with the increase in outsourcing and volatility in commodities, supplier relationship management (SRM) has moved to the forefront of organizational strategy. Companies are spending increased time on their selection criteria and determining clear best practices to manage partner relationships. However, few companies have mastered supplier management and SRM is in its infancy.
The question of quality
With the increase in outsourcing and the growth in world trade, product quality is increasingly an important factor. Many companies in the pet food, toy and dairy industry are still reeling from recent quality scandals in China and other Parts of Asia. These scandals have put pressure on businesses and consumers are increasingly concerned about the quality of the product. This quality scandals of late, as well as those of the clothing sector in the past ten years, the importance of managing supplier relationships and the importance of monitoring and control highlighted. The days when companies could rely on: "We have no control over our suppliers," are gone. Environmental concerns and a greater control of workPractices also call for improved relations with suppliers.
Outsourcing for the "unknown"
With the increase in outsourcing in Asia, companies must understand the cultural issues. Many businesses were burned when outsourcing production to countries like India and China. management practices that work in one country does not necessarily work in another country and the companies have their way of thinking and working for change in other markets.Country-values are different. For example, the cut legal corners seen as a survival technique and is much more tolerated in some countries. It 'important to understand the value of the country and it is important to take something.
Outsourcing to emerging markets offers companies unique challenges. Companies need to develop contingency plans for delays in delivery are usually more often. As one executive put it, "always on time deliveries from our suppliers in Asia,is one of our biggest challenges. "Working in the" unknown "company also offers legal challenges are unique. Foreign companies that trade with China and India in the past complained about unfair legal practices. Companies need to avoid disputes and ensure the contracts are clear to all parties involved. Go does not like to read the fine print and all parties to try to prevent a legal target. always make things easier for suppliers. consult lawyers to understand not only the local laws, but also culturalArguments. The interpretation of the law may vary from country to country and cultural issues must be considered.
Technology
In recent years, companies have seen technological advances in managing relationships with suppliers. The day of administration with vendors tables are gone, and SRM is more complex. Businesses call for better visibility. The need for real-time information is increasing. Companies invest considerableResources in the management of suppliers and the use of relationships with suppliers of software is becoming more commonplace. responsible for the supply chain increasingly use the Internet to communicate and collaborate with supply chain partners.
Finding the right partner
Before to concentrate only on price, the value sometimes take a back seat. Today, companies are spending more time and resources to develop and implement a comprehensive supplier qualificationProcess. Companies need a strategic roadmap and clear selection criteria. For example, the selection criteria are important as the strategic vision, performance, capacity and environmental issues. Companies need to assess whether potential suppliers meet their standards. In addition, the selection of suppliers is not limited the purchase of services, and companies are increasingly using cross-functional teams. to monitor the use of external agenciesand relations with suppliers song is also increasing.
Building relationships
Companies must always act with the report in mind. Companies should have a clear development plan for each partner relationship with clear goals. Building trust is essential in every respect and trust must be developed at all levels of the organization, not only at the level of senior management. For example, companies can implement induction programs department and incorporate them in some casesSuppliers in the organization. The partners are other firms, the better for all concerned. With clear channels of communication, the partners have the confidence to solve problems in his head.
Benefits of relationships
One of the most important benefits of long-term relationships is to reduce costs. The companies are working together to solve the supply chain and learn from each other. Better cooperation and communication will lead to an increase in sales.Enhanced cooperation may also lead to better planning and trip planning. For example, if the levels of assessed Kellogg week made an inventory of IT that the majority of Tesco shares were at the center. Kellogg has worked with Tesco and changed its program to deliver the host retailers. By changing the expected delivery, reduced stock outs Kellogg, increased sales and increased sales and customer satisfaction. As the KelloggExample demonstrates that cooperation with suppliers can provide mutual benefits for all involved.
In today's world, companies require suppliers to results-oriented and demand more high-speed providers. Not all providers are equal, all suppliers should be segmented. Segmentation is crucial because the importance of partnership and how much companies must spend time on building relationships with suppliers to determine. All members of the supply chain mustclear responsibilities and each member of the team must be aware of its responsibilities. Companies need to monitor compliance and implement and communicate clear Key Performance Indicators (KPI). In SRM high-speed world of today, on top of a successful company. SRM has changed in recent years and suppliers are now seen as an extension of the business.
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