The role of developing supply chains and creating performing suppliers that can improve a manufacturing SME’s financial and operational performance goes beyond just negotiating a price and placing a purchase order.
Creating Collaborative Environments
To truly create value in your supply chains, an environment whereby the internal requirements are transmitted to the supply chain need to be created.
Those internal requirements go beyond capturing the specification but influencing the specification requirements document in the first place.
What are the businesses top level goals?
What are its current challenges?
How can the supplier help resolve any challenges the business is facing?
How do the requirements impact upon other functions within the business?
What are the clear goals for success for the supplier?
Once all this is captured, understood and the requirements document collated, it requires careful commercial control. It needs someone to control the “loose lips” that can weaken a negotiating position. Someone who is skilled in delivering the message, telling the supplier what is needed, facilitating the process and pulling in and engaging all functions where and when required, to ensure the business commercial interests are protected.
How the above is done, whilst promoting an engaging and co-operative environment is a skill that not everyone or anybody can do.
The critical element in this type of process is to seek opinions and thoughts of the supplier, harnessing information and potentially finding different ideas which maybe better.
But, the skill is creating the collaborative environment where suppliers feel empowered to share alternative thoughts.
Once contractual frameworks are in place and there is a level of long term commitment in place, it is important to manage that relationship.
Do you really want to put the effort into developing the framework but then leave it to sit in a long-lost draw, and only dusted down if there is a dispute? (Assuming you find the draw!!)
A contract should create the commercial and legal framework by which the relationship is managed. Some sort of supplier relationship management plan needs to be developed, and regular business reviews pulled together.
Again, this provides an opportunity for both parties to update current business status; a chance to share current pinch points which you believe each other can solve; mutual benefits. As well as measuring key strategic and tactical performance against the contract.
A facilitated process
The role of procurement is to be the function that project manages and facilitates all the above.
It acts as the go between, “The Conduit”, between internal stakeholders and suppliers and their stakeholders.
The constant presence at all stages of the process to ensure the highest levels of commercial control, meeting all stakeholder needs and negotiating/influencing internally and external to achieve this.
From engineers and operations to capture the specification, to finance to understand the financial constraints, (or influencing budgets), H&SE to understand any implications, and directors to ensure initial buy in and future approvals. But constant feedback loops are essential to the credibility, and engagement to any piece of work.
Procurement is about being the valued business partner, that engages at all levels within a business to achieve great results throughout the procurement lifecycle. Creating value in the supply chain to create long term sustainable results.
And this can only be achieved through collaboration internally and externally.
Think how much better your business would be if your suppliers are working collaboratively with you!
The relationships specialists
APS is the UK’s only provider of strategic procurement services to UK Manufacturing SME’s specialising in operational cost management and CapEx.
We are confident we can make a positive impact on your business and would be delighted to discuss this with you further.
Contact us today and request our free diagnostic tool and see where you can make a step change in your procurement activities to improve costs and supplier performance.
Tel: 07515 003472