Igor Rikalo is President and COO at o9 Solutions.
It is famously said that the best-laid plans often go awry. This can be true in both life and business, especially when global supply chains are involved.
Across many industries, supply chain disruptions have become the new normal. In my previous article, I mentioned the importance of building collaborative relationships across an organization’s departments involved in integrated business planning. For companies that want to create plans that stick and develop resilient supply chains, it’s just as essential to foster collaborative and transparent relationships with all the suppliers in their supply chain ecosystem.
However, the process of facilitating greater collaboration between supply chain suppliers isn’t easy and companies will likely encounter barriers along the way. Roadblocks can include:
• A lack of supplier onboarding to a company’s processes and disconnected or inflexible technologies hinder optimal data sharing and can lead to supply chain delays.
• A lack of incentivization from both sides on the importance of cultivating strong supplier relationships and the impact this can have on the business.
• A lack of trust in suppliers and a hesitation to share information with suppliers and vendors. This hesitation can be valid for both sides, especially if your supplier provides services to a competitor or if your company sources multiple suppliers who essentially compete to provide products.
Creating stronger multi-tier supplier collaboration and maintaining supplier relationship management (SRM) is top of mind for many of today’s business leaders. As such, we’ll take a deeper look into the factors that are driving this process. While today’s technology platforms can help to facilitate information and data sharing with a company’s suppliers, developing the trust between all parties to openly share information is dependent on getting to know your suppliers.
Here are three things to consider:
Include suppliers in your business planning processes.
Collaborative planning processes are a necessary component to ensure company-wide stakeholders are aligned on critical business objectives and goals, but it’s also key to consider expanding such collaborative efforts to include your multi-tier suppliers.
By involving suppliers in your company’s integrated business planning and sales and operations planning (S&OP) processes, teams can proactively share information such as market insights, relevant supply investments, as well as upcoming campaigns so that a co-developed strategy can be agreed upon and implemented.
When suppliers are included during the planning process, it creates greater visibility, which allows your organization to have a better understanding of suppliers’ broader market perspective as they interact with multiple suppliers and customers. Suppliers are then able to gain insights through your company’s closer connections to the end customer.
For example, a big priority at Toyota Motor North America is building organizational efficiencies that lead to a better customer experience. A key aspect of this initiative was developing greater visibility with suppliers to build an accurate scope of tiered supply and greater collaboration to improve demand forecasts/commits and to proactively address demand and supply issues.
Set expectations during a supplier’s onboarding.
An effective way to ensure a collaborative relationship with a supplier is to set the tone from the very beginning. Creating an operational framework that allows for a mutual sharing of information and data encourages collaborative interaction, and it ensures that all stakeholders who agree to uphold this process can help set appropriate expectations for all involved.
The onboarding framework should focus on each organization’s respective processes for ordering goods, producing products, quality control and adherence to regulatory requirements to determine the best ways of working together. Additionally, other factors that can be incorporated into the supplier onboarding framework to foster collaborative actions include establishing best practices for communicating among teams, defining the allocation of resources, involving suppliers in the blueprinting process and driving alignment with initiatives that are jointly beneficial.
Another key aspect is keeping it simple because if it’s not easy, it’s not going to happen. This means that the technology that will facilitate information sharing has to be seamless to use. It has to be easy to connect the various technologies together that will enable collaboration between teams. It has to be easy to “share” operational constraints (this is where an interface built on generative AI might be helpful). Most importantly, the processes and technologies set in place have to make it easy for teams to focus on the exceptions and let the “automation” drive most of the information sharing between your company and suppliers.
Technology is key to building collaborative ways of working.
A big SRM challenge companies face is ensuring that upstream suppliers they may not have regular contact with can fulfill demand for the necessary components or materials needed to develop products. For example, if company A’s tier-three or tier-four supplier for lithium batteries is directly impacted by a cobalt shortage, it would reduce the number of components that the supplier is able to deliver to its downstream customers, which includes company A’s tier-two and tier-one suppliers. Without multi-tier visibility—and collaboration—it’s unlikely that company A will find out about this shortage with enough lead time to respond proactively and mitigate the impact on its supply chain.
A way to build more flexibility in collaborating with multi-tier suppliers is to leverage planning platforms with advanced AI and analytics capabilities that can model the multi-tier supply chain network. These next-generation platforms can quickly and automatically configure the necessary algorithms, workflows, interfaces and reporting capabilities so that collaboration efforts between enterprises and their suppliers are unified and all stakeholders are working with—and making better decisions from—shared information.
Overall, multi-tier collaboration can have a transformative impact on a company’s supply chain. Not only does this build trust and a greater willingness to share information between your organization and suppliers, but it also plays a critical role in gaining end-to-end visibility across the supply chain. While technology and processes are significant factors in facilitating supplier collaboration, it’s just as important to focus on building an overall company-wide culture of collaboration. This ensures that collaborative processes don’t just look good on paper, but are effectively implemented across all aspects of the business and its supply chain ecosystem.
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