One of the keys to achieving agile response to fast-changing markets lies upstream of the organisation in the quality of supplier relationships.
Many companies have not recognised that competitive advantage that can be derived from closer relationships with key suppliers.
Instead there is often an arms- length, even adversarial approach to managing the supplier base.
1. Supplier base must be rationalised. It is not possible to create close relationships through process integration with multiple suppliers. Agile companies have sought to identify a limited number of ‘strategic’ suppliers with whom they can work as partners through linked systems and processes.
2. High level of shared information: There has to be clear visibility of downstream demand; data on real demand needs to be captured as far down the chain as possible and shared with upstream suppliers.
3. Need for a high level of ‘connectivity’ between the firm and its strategic suppliers: What this implies is not just the exchange of information on demand and inventory levels, but also multiple collaborative working relationships across the organisations at all levels.
Leveraging Supplier relations can give 100x returns on investment.