No matter the industry, there has always been conflict in the supply chain. That, I believe, will continue to be true. More times than I can remember, I have presented my keynote presentation titled, The New Era of Manufacturer/Distributor Cooperation at either manufacturing or distribution association meetings. In doing my research for these presentations, the supply chain partners usually claim that they communicate well with each other. Unfortunately, that rarely proves to be the case. Through collaborative relationships, supply chain partners can improve.
In building an effective collaborative relationship with your supply chain partner the one thing that will help you the most to improve communication is your ability to understand the value your supply chain partner needs to receive from the relationship. As an example, your procurement department might believe that your supply partner should cut their price so low that they no longer make a profit. This is simply crazy.
If you make an effort to understand the total value your supply partner needs and help them to receive that total value package, they will perceive you as a great partner and communication will become easier. I am not suggesting that you give away the bank, but rather only put your energies into activities, services, and so forth that delivers the value to your supply partner that they want.
Supply Chain Improvements
Just-in-time inventory purchasing and supplying as exemplified by the famous relationship between Wal-Mart and Procter & Gamble has continued to prove successful. Home Depot and Dell Computers have also built powerful alliances with their suppliers for cost saving just-in-time inventory in similar applications. You can do this too. You can develop closer relationships with your supply chain partners.
Below are additional supply chain improvement areas available to you through strategic alliance relationships:
1. Management of supply channel conflict
2. On-time product delivery
3. Prompt response to complaints
4. Greater consistency in parts, supplies, semi-assembled, and completed products
5. Detailed agreement as to handling of product problems and customer complaints
6. Improved supply chain productivity
7. Specific (quarterly, yearly, etc.) volume commitments
8. Key contacts that are dedicated to your account
9. Improved supplier loyalty
10. Prompt response to quote requests and price problems
11. Confidentiality of shared business strategy
