The role of relationships in supply chain management

27 Aug 2014
Article by Achilles

Supply chain management is about more than making sure all the different links in your network are operating in the right way. Relationships play a central role in supply chains and if organisations don’t get them right, they’ll feel the ramifications all the way from suppliers to customers.

Clive Rees, the new chief procurement officer at Fujitsu for UK and Ireland, has recognised the importance of creating strong relationships.

He told Supply Management that when he took over the role he realised he needed to change how the company engages internally and how it is perceived by others. The other challenge was looking at how to get value from suppliers and improving relationships.

To do this, Fujitsu needed to develop its people so that they have the ability to manage these relationships.

Ultimately, this has benefits for both customers and suppliers, strengthening the supply chain and service offering.

“What is the purpose of procurement now?” Mr Rees asked the news provider. “It’s not just about cost reduction, it’s about the managing of relationships.”

There is certainly a lesson for buyers in Mr Rees’ approach to managing his team and ultimately his suppliers.

By placing relationships at the centre of supply chain management, it is possible to create a more collaborative and effective dynamic.

Buyers that work well with their suppliers are better placed to get their compliance when it comes to new rules and regulations. What’s more, suppliers will be much more likely to grant buyers access to the information they need thereby improving transparency.

A collaborative relationship will also facilitate innovation, which is crucial for achieving growth and improving resilience. Capgemini’s ‘Supplier relationship management research 2012-2013′ report explained: “The involvement of suppliers for innovation in organisations has been a reality for many years. Most organisations consider their suppliers as being one of the most, if not even the most, important sources of innovation. Supplier relationship management can increase the level of innovation-driven procurement, and provides the procurement function in the organisation with the tools and technology to make the early involvement of procurement a success”.

However, according to Capgemini, the challenge for buyers is balancing the traditional role of negotiating a commercial agreement with maintaining a trusting partnership to cultivate innovation. Indeed, the two requirements don’t always go hand-in-hand and there are certainly some inherent frictions.

What’s more, many companies are aware of the importance of collaboration but have yet to formalise these relationships. Capgemini claims that this is where supplier relationship management comes in, as it can help to formalise and digitise this relationship.

Achilles’ communities allow buyers and suppliers within an industry sector to collaborate and work collaboratively so both parties can focus on strategic objectives: industry-wide improvements, efficiencies and profitable opportunities.


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