Building Deep Supplier Relationships

Building Deep Supplier Relationships

Building supplier relationships is explained in great detail and is very key in the supply chain management industry. Building an effective Supplier relationship is a strategic approach that helps companies develop mutual awareness of what’s going on between them, find effective ways to communicate, and resolve issues efficiently. The article gives everyone reading it great insights to the importance with building supplier relationships to long term success. It talks about how American companies created supply chains that superficially resembled those of their Japanese competitors, but they didn't alter the fundamental nature of their relationships with suppliers. This allowed not long into the partnering movement before manufacturers and suppliers were fighting bitterly over the implementation of best practices like continuous quality improvement and annual price reductions, so companies needed to understand the importance of what good relationships look like with partners. The article explains that there is the Japanese model to developing supplier relationships which includes the six step process in building deep supplier relationships. The six step process in developing relationships is conduct joint improvement activities, share information intensively but selectively, develop supplier technical capabilities, supervise your suppliers, turn supplier rivalry into capabilities, and understand how your suppliers work. The six step process gives everyone the in depth format to how managing supplier relationships may not be easy but it’s a process that is very effective.

The article gives points of great detail to show that with the right amount of care using these strategies that investing in supplier relationships will work effectively. Both of the companies should gather as much information of the other that allows for the two companies to prosper even through tough times. Many times the article explains that companies may have a fear of the other company changing, but they have to focus on the benefit on the change that’s occurring for the companies to truly benefit. In order to truly collaborate effectively with the other, the company’s need to share private, in depth information that would include there business process, strategy, and financial stance. The article shows that the  key here is that a company feels as though sharing information may be risky because companies may share the information with competitors and the company’s won’t be able to tell if the other is being fully honest. Toyota and Honda both use this because they know the importance of creating foundations for partnerships if they know the vendors as much as the vendors know about  themselves. The need for continuous improvement is explained showing that having this increases profitability a lot. To achieve great supplier relationships with beneficial results collaboration should be effectively used with complete trust. If every company uses these processes discussed in the in the long run, the  business will be able to save money. Dealing with suppliers, customers, and other parties can be tricky, regardless of your experience but the use of every skill and knowledgeable asset will help any company looking to succeed.