Collaboration with Your Suppliers – Are You a Giver or a Taker?

Collaboration was a theme that virtually every presenter emphasized at a medical device strategic sourcing conference I attended in January. EC Sourcing Group was the Silver Sponsor.

Attendees included executives from a broad range of companies serving the medical device market.

There were many “ah ha” moments for me and some important reminders including:

  • You can’t spend enough money to protect against all risks. Disruption in the supply chain is inevitable.
    • Weather, changes in political leadership, revamped trade agreements and new legislation should be considered the norm. These disruptions will require a strong and flexible plan to insure continuity of supplies and services.
    • The advantage of sourcing materials in a country can suddenly turn into a competitive disadvantage if a new trade agreement or treaty is enacted.
    • Helping key suppliers to anticipate and deal with disruptions can only occur if you have a strong give and take relationship. This won’t happen if cost isn’t balanced with quality and service.
  • Collaborative supplier relationships are vital when the unexpected happens. Investing in your supply chain is part of a strategic approach that will drive success for both companies.
    • Suppliers that have a plan in place to shift production and replace capacity become much more valuable.
  • Supplier qualification is much more than checking boxes or following a standard process.
    • One large organization learned the hard way that all suppliers must be fully vetted. Understanding what part of the operation the supplier or service provider will have access to should be a critical part of the evaluation.
    • Access to sensitive areas or operations should mean a deeper background check. Size shouldn’t matter.
    • Helping your suppliers understand their role in your overall success should raise performance and loyalty.
  • Understanding how important the supplier is to a product or series of products is critical.
    • It is easy to say that your product is only as strong as the weakest link.
    • It is much harder to balance the quality required versus the cost for a seemingly small part. The troubles of a well-known producer of smart phones knows this all too well.
  • It is easy to believe that the supplier of a commodity item like corrugated boxes is easily replaced.
    • In some cases, this may be true.
    • What happens if your shipments get damaged because boxes start falling apart in transit? Perhaps constant price compression motivated the supplier to lower quality.
    • At some point a contract isn’t worth it regardless of volume. A strong relationship with your supplier should allow you to negotiate an agreement that allows each party to make a reasonable profit.

It has been said that “all politics are local”. A great politician must connect with the people they represent and understand their needs. The same theme can apply to sourcing. Your relationship with each supplier brings value once you understand their needs. Building a strong collaborative relationship with all of your suppliers may be the ideal. Companies that are working toward that ideal have a distinct competitive advantage.

Action Step: Analyzing the importance in size and scope of your service providers and suppliers is a great first step. If you are uncertain how to make this happen, a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you want. If you would like to explore this topic in greater detail, please contact me.

If you want to explore a purchasing or procurement topic in greater detail, I invite you to request a 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that my recommendations will be right for everyone, so don’t expect a sales pitch. You can reach me at 973-936-9672.

Organizations of all sizes are reducing costs and increasing efficiency, without changing the way they conduct business. If you would like to know how, simply give me a call or send me an email with your contact information and the best time to reach you.

You Won’t Drift to Success©
Think about it.
Until Next Time, I Wish You Great Success in Your Business and in Your Life
Mike Jeffries