The Relationship Between Buyers and Suppliers

Can you imagine a world where the buyer and the supplier are both committed to each other’s success? Wouldn’t it be wonderful if you, the supply chain professional, always honored the golden rule? You remember, it is the one about treating others the way you want to be treated. Suppiler relationships are no different.

For yours truly, incorporating the golden rule into my personal life has always been easy. I smile a lot, look people in the eye, and I am there when my family and friends need me. But in my professional life, I realize now that I was lacking. I never took the time to incorporate Confucius’s concept into my procurement and supply chain interactions. Frankly, I found that the golden rule was missing in action when I negotiated, and my suppliers suffered the consequences.

At the beginning of my career, I had mentors tell me, “Because we are the customers, what we say goes.” I bought into this philosophy, always packing my metaphorical Louisville Slugger to every supplier meeting. It was all about Me, what I wanted, and what My company and I needed. I was determined not to leave without getting exactly what I wanted. There was absolutely no supplier partnering or development; it was all about price and delivery time, based on My schedule. 

For five years, I did as I was trained. I assumed purchasing managers in other companies were doing the same.  I had many wins over the years, but winning by bullying began to bother me. My job was becoming less meaningful and less enjoyable. After losing a critical supplier due to my aggressive, fight to win behavior, the voice in my head started screaming:

“You do not beat up on people in your personal life, so why are you doing it in your professional life? Suppliers are people too!”

Another Way to Build Supplier Relationships

My epiphany ensued: there was another way to work with our suppliers. I did not need to constantly beat up my suppliers to achieve my goals. We both could feel successful because we both had the same goals of “lowering the total cost of ownership (TCO) of the end-to-end value chain and increasing value to the buying enterprise and, ultimately, the end customer.” (Rand.org)

Upon revelation, I immediately set out to learn how to be a different type of procurement leader with the goal of developing the supplier base. I have taken bits and pieces of what I found online, read in books, and learned from others, and I have made up my own process that works for my company and me. My investigation helped me develop more effective supplier relationship policies. Below you will read two different ways to go about Supplier Development by two of the best Supply Chain and Procurement leaders. Their resources SCMDOJO and Vested Way, have been invaluable in my quest for enhanced SRM. I encourage you to follow both leaders on LinkedIn and review their informative websites.

Thought Leader Tips on Supplier Relationships

1. First, the structured SRM (Supplier Relationship Management) processes, like you will find discussed by one of my favorite educators and hands-on SRM professionals, Dr. Muddassir Ahmed, Ph.D. He defines SRM as “Any effort of a buying firm working with its supplier(s) to increase the performance and/or capabilities of the supplier and meet the buying firm’s short and/or long-term supply needs. Moreover, Supplier Development promotes ongoing improvements that are intended to benefit both buyer and supplier(s).”  He also discusses supplier agreements as well as the six basic actions that can transform supplier relationships in his article Buyer Supplier Relationship and goes on to discuss obstacles that stand in our way as Procurement leaders in Procurement Problems and Solutions.
2. Moving on to a newer approach, Kate Vitasek helped develop a non-traditional business model, and I cannot get enough of the Vested®. I find it to be the absolute right way to practice the golden rule in a professional setting.  According to their website, “Vested® is a business model, methodology, mindset and movement for creating highly collaborative business relationships that enable true win-win relationships in which both parties are equally committed to each other’s success.” Vested is a strategic model. You can dig a bit deeper by reading this article, Vested Outsourcing The Next Big Thing. I would also suggest reading their case studies, checking out their courses (some of which are FREE), and investigating their book series on Vested Way.

Developing and maintaining a positive relationship with suppliers makes sense financially too. The following quote puts it in perspective for me. “Building a long-term healthy relationship between supplier and organization will allow for ideas and feedback to be passed between the two. This will allow for the improvement of operations, streamlining the supply chain and reducing costs in addition to improving customer service. Ultimately, we as the buyer want to receive the best value for our dollar. By focusing more on Supplier Development and mutually stronger relationships, this is exactly what we will get.” (HCMWorks.com)

To Conclude

It does not matter if you work for a billion-dollar corporation or if you work for an SME as I do. The overall practice of developing, partnering, and retaining your supplier base should be the focus of every procurement person, from the buyer to the CPO. The best way to begin, I have found, is by practicing what should be called the Golden Rule of Procurement: treat your suppliers the way you would want to be treated yourself.