Maintain A Strong Relationship With The Supplier: Tip #4:
Tip #4: Maintain a Strong Relationship with The Supplier
There is a lot of articles written about the importance of the supplier in new product development and innovation. Most of these articles focus on topics such as supply chain management, supply management, supplier relationship management (SRM), and quality control. While these topics cover important issues such as product quality and continuous improvement plans, there is a lack of research and discussion about the importance of a strong supplier relationship when it comes to new product development.
Leardon Solutions has written about how to achieve strong supplier relationships in past articles focusing on supplier capability and commitment. In order to get the necessary commitment and capability from suppliers, there are Five Vital Characteristics that must be implemented into the relationship. These are:
- Encourages respect
- The relationship is a partnership between two trusting parties
- The relationship supports growth and development of the two parties
- The relationship consists of managed risk taking
- Both parties have complementary and balanced capabilities.
Each of these vital characteristics impacts the supplier commitment, capability, or both. If these improve, the relationship will improve to the point of becoming a strong relationship. There are three types of relationships, simply stated as Poor, Fair, and Strong:
POOR RELATIONSHIP: A Poor Relationship exists when the supplier does not commit to the relationship and is not a capable of performing the job at hand. In this case, the supplier must demonstrate some desire to increase their capabilities or their commitment, otherwise another supplier should be chosen.
FAIR RELATIONSHIP: A Fair Relationship exists when the supplier is either fully committed to the relationship or demonstrates good capabilities, but not both. It is possible for this type of relationship to be successful in the short term but typically the relationship will fall apart unless improvement is made.
GOOD RELATIONSHIP: A Strong Relationship exists when the supplier exhibits full commitment to the relationship as well as demonstrates excellent capabilities. This is the pinnacle of supplier management and these strong relationships will become long-term success.
Of course, the goal is to achieve a strong relationship because when this is achieved, there are many benefits including:
- The supplier feels accountable for the success of the project and acts accordingly.
- The teams collaborate efficiently on solving issues and defects, even when the supplier didn’t cause the issue.
- The supplier might give preferential treatment such as payment terms, “jumping the production queue”, allowing lower production volumes, or improved pricing.
These are just a few of the benefits of a strong supplier relationship. Successful product development teams understand that strong supplier relationships are absolutely necessary for success and therefore focus on maintaining and improving these relationships.
Need more information? Please contact us with any questions or contact me directly at joseph.donoghue ( at ) leardon.com