Benefits of Closer Collaboration with Suppliers
Delivering benefits from closer collaboration between suppliers and customers can not only strengthen the links between them so that the relationship between the supplier and the customer is one of mutual trust, but it can also deliver tangible benefits of efficiency.
Here’s our top benefits for closer supplier collaboration.
Best Practice Shared: Collaboration results in best practice being shared throughout the supply chain. All those within the supply chain are aware of what is required. There is a real understanding of what the goods supplied will be used for and what causes problems within the supply chain.
Fewer defects: The sharing of best practice also results in improvements being made on a continuous basis, thereby reducing the instances of waste or poor value.
Improved communication: Communication is a direct result of closer collaboration with suppliers. For them to be aware of the requirements that the customer has, there has to be communication.
Suppliers get to have a voice: The collaborative approach requires communication to be two way, with suppliers being able to report any problems to the customer and hopefully they can then work together to ensure that these are eliminated.
Continuity of supply: The process of managing supply chain risk improved because the supplier is able to plan effectively for the future.
Improved stability: Stability within the supply chain cannot be overestimated. Any supply chain that is unstable will have stock outs, will have an inability to meet sudden peaks in demand and ultimately will not provide a good service to the customer.
Flexibility: The closer the collaboration between suppliers and customers ensures that the supply chain can meet any peaks or troughs in demand.
Reduction in costs: The reduction of defects and the time saved within the supply chain means that the supplier is able to lower the costs of goods supplied, which is a benefit to the customer but also helps the supplier to keep afloat and stay competitive.
A mutually beneficial relationship: Whereas in the past, the relationship was between supplier and customer was adversarial and the supplier was often seen as being wholly dispensable.
An optimistic future: The final benefit of closer collaboration with suppliers has to be the potential for expansion and new opportunities that are presented when the supplier and the customer find that working collaboratively makes them a very strong team.
“Companies that collaborate effectively across the supply chain have enjoyed dramatic reductions in inventories and costs, together with improvements in speed, service levels, and customer satisfaction” added Salomón Juan Marcos Villarreal, president of Grupo Denim.