Greater collaboration a priority for eight in 10 firms

Improving collaboration with suppliers is a priority for almost eight in 10 (77%) companies, according to a survey.

The survey, by Ivalua, found improving CSR performance (41%), increasing margins (38%) and accelerating the pace of innovation (36%) were the top opportunities collaboration could bring.

But a focus on costs was hindering collaboration, with 77% admitting cost dominated supplier selection for most sourcing projects.

Ivalua, which surveyed 200 procurement, supply chain, and finance professionals worldwide, found 90% believed they had improved collaboration with most strategic suppliers in the last two years, and 91% said the same of their broader supply base.

However, there was no mechanism in place for many organisations to collaborate effectively with the broader supply base (42%), with finance (41%), IT (40%), or their most strategic suppliers (39%).

Three quarters (76%) considered the most effective ways to improve supplier collaboration to be setting up performance goals and KPIs that place greater weight on it.

Almost two thirds (63%) believed investing in technology to enable better information sharing with suppliers would be the most effective way to achieve the same result.

More than eight in 10 (84%) said greater digitalisation would enable them to more effectively mitigate the impact of Covid-19 on the business, while 35% thought better digital skills would achieve the same effect.

Responses varied widely according to geography with 50% of German business saying they had no processes in place to collaborate with strategic suppliers, compared to 45% in the US and 33% in the UK.

Only 38% of German respondents believed that procurement was seen as a key business partner which contributes significant value. This compared to 86% in the US and 82% in the UK.

“Most procurement departments are taking steps to improve supplier collaboration, but supplier selection is still dominated by cost, and businesses are struggling to work strategically with suppliers,” said Alex Saric, chief marketing officer at Ivalua.

“As firms increasingly rely on suppliers to help them keep up with the growing pace of innovation and to adapt during crises such as Covid-19, they need be building stronger relationships.”

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