Updated: Apr 27, 2020
The group U2 are well known for their music. Based on some of their song lyrics the group could also have had a previous life as Procurement experts. This is embodied in the song “With or without you”. Like the lyrics in the song, organisations can sometimes feel they "cant live with or without" suppliers in their supply network.
In today’s ever more complex and connected world it is vital to have the right supply network to succeed and gain a competitive advantage.
Unlike the supply chains of 30 years ago supply networks today are an intricate web of large and small organisations which, going back up the value chain often runs into thousands of different players. They all bring their unique set of capabilities, risks and complexities which need managing.
Teams within organisations can find themselves stuck with suppliers that they have “adopted” or are directed to use. When organisations use suppliers over a long period of time that organisation can feel that they no longer get best value for money. Feelings can build that the supplier is not as “hungry” as they were when they first won the initial work and settle into a day to day rhythm instead of continually pushing boundaries. In some instances, it can feel that some suppliers are not on the same level as your organisation (particularly around innovation) and are high effort to manage, detracting focus from other activities to hit annual objectives.
Its not uncommon that organisations feel stuck in a position where they can’t live with or without certain suppliers.
So what to do about it?
First it helps to work with your procurement and finance teams to understand how much you spend on what and with whom.
Secondly you need to be able to identify which suppliers are strategic to the organisation. This doesn’t necessarily mean who you spend most with. It could be a small company who makes a small but vital part of your organisation’s products or services.
Once you have these two elements you can start to map out and devise supplier strategies. For example mapping suppliers based on interest (how important you are to the supplier) and influence on your organisation (what is the impact a supplier makes on your products/services if they stopped delivering tomorrow).
After strategy development comes implementation and communication. Communication is key in any relationship. Having effective communication with suppliers, especially ones that you are stuck with can help break deadlocks and provide a platform for suppliers to better understand requirements and build a foundation for an effective future working relationship.
The result of categorizing suppliers, developing tangible strategies and having clear and open communication (with suppliers and internal teams) should be a significantly improved competitive position, less problems to solve and faster resolution of challenges that do arise.
The outcome for the organisation is only having suppliers that the organisation cant live without and wouldn’t want to live without.
If you would like to explore this topic in more detail get in touch.
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