Do you follow the tough-guy practices of Don Corleone and make an offer suppliers can’t refuse?
Or do you strive for a Moneyball-style deal, where both you and your suppliers win?
As Ariba’s Sundar Kamakshisundaram explains, your company’s approach to supplier negotiations can have a profound impact on the health and agility of your supply chain. Companies should strive to achieve customer of choice status.
The goodwill that companies’ develop with their suppliers is a critical asset and competitive edge in today’s increasingly complex global economy. It’s not the art of negotiations that matter. Rather, it’s the art of collaboration that delivers a reliable, efficient supply chain.
Business networks are key to enabling collaboration with suppliers and in turn, giving both suppliers and buying organizations better visibility within the supply chain and business processes.
At The Networked Economy blog, Sundar has written about supply chains and the risk factors that companies overlook.
When companies use “tough guy” negotiation tactics to squeeze costs from their suppliers, it can result in unnecessary vulnerabilities within their supply chains. Suppliers may be more likely to use cheaper resources or less-skilled staff to support your business. Or they may take advantage of urgent orders from your company by inflating costs to recoup revenue lost in negotiations. Vulnerabilities also extend to your suppliers’ suppliers … will they follow the same quality standards your brand promises? The recent horse meat scandal painfully illustrates the risks companies are exposed to within their supply chains.
With business networks, companies can quickly find and evaluate suppliers who can meet their specifications, standards and sourcing needs. Likewise, suppliers can discover new opportunities to do business with your organization by gaining visibility into RFQs and RFPs.
When companies take a collaborative approach to supplier relationships, suppliers become a strategic asset in keeping your supply chain running rather than a potential risk.
To meet Sundar and hear more about creating a win-win supply chain, add sessions from the Business Networks campus to your SAPPHIRE NOW agenda. To learn more about Sundar’s views on managing supply chain risks, read his postings at The Networked Economy blog.
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