Managing your supplier relationships

27 January 2009
LORES_Steve_bagshawSupplier relationship management is something we cover frequently in these pages and on Historically the articles have had some recurring themes: how buyers should align their objectives with suppliers’, encouraging innovation and focusing on long-term relationships. But that was in the good old days. As recently as February 2008 we reported the SRM strategy of big hitters including: BP, McDonald’s and Aviva. None of them mentioned the possibility of a downturn, let alone the fundamental shift it would bring. It wasn’t on the radar. Not to single these organisations out as they are certainly not alone in that respect. Since the start of the recession the tone of buyers’ approach to vendors has hardened. The focus is now: “Will suppliers continue to be able to operate?”, “Will our supply chain survive” and even “The suppliers are worried whether or not we are going to be able to pay up.” And other prominent topics have emerged such as terminating supplier contracts. And to reflect that in this issue we have not one, but two pieces examining the issue. But how does this new climate affect what buyers do on a day-to-day basis?  The consensus from our roundtable panel is that stuff that used to be talked about in terms of “going to the next level” is now unavoidable and urgent – working out which suppliers really make a difference to the business and getting maximum benefit from those relationships. And at the same time ditching the vendors who aren’t, as it turns out, that important, flexible or innovative. Equally, the downturn highlights how procurement may need to look at the way it treats suppliers. Are they, albeit inadvertently, making life hard for vendors through tardy accounts payable or unnecessary administration. Naturally we want suppliers but are we sure we are doing all we can to make sure that happens? No doubt we will also be returning to this theme.
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