Hau Thai-TangBuilding a relationship doesn’t happen overnight, especially if you want a healthy, fruitful and productive one. While this advice applies to our personal lives, it is certainly true for relationships we build at work, as well — and it applies to many people in our networks, not just co-workers. Understanding the foundations of a good relationship is vital, especially when it comes to supplier relationships. Healthy supplier relationships require a lot of work, and it’s important that manufacturing companies understand some key factors that help to build collaborative working relationships with suppliers.
Companies that seek to improve and develop relationships with suppliers should incorporate these three elements into their business model at all stages: alignment, partnership and engagement. Here at Ford, we’ve used these principles to help improve relationships with our suppliers. By incorporating these aspects and ensuring employees, at all levels, learn the importance of these relationships during education and training programs, other companies can ensure they are on the right track to forging long-term effective and fruitful supplier relationships as well.
Alignment
It may seem like a no-brainer at first, but coordinating between different groups and ensuring everyone is on the same page can sometimes be difficult. In order to foster a true partnership between OEMs and suppliers, there needs to be full alignment. It’s unrealistic for a manufacturing company to expect to successfully parallel its business goals with a supplier if they are not aligned internally. This includes coordination within the marketing, sales, product development and purchasing teams to ensure there is a clear, common goal. These departments need to be aligned because they will ultimately help communicate to suppliers what sort of technologies and product innovations are of interest, as well as communicate to customers what benefit the end product offers. This is a vital first step because suppliers can then prioritize investments, research and development spending and how resources should be allocated.
However, it doesn’t stop at internal alignment. After a company is on the same page internally, they can then ensure that the same becomes true with their supplier. This requires significant work by both the OEM and supplier to ensure everything runs smoothly. Manufacturers should expect to spend time collaborating and working with suppliers to ensure goals are lined up. By creating a collaborative culture where everyone has the common goal of increasing profit, both the OEM and supplier can reap the benefits.
Partnership
The relationship between supplier and OEM should be a collaborative partnership with mutual interdependency. Manufacturers have to ensure that employees and divisions within the organization, on all levels, have an understanding of the partnership and how to build that relationship. This means the supplier-OEM relationship should go beyond the purchasing skill team to include all internal work partners. Specifically, the product development, manufacturing, quality and business unit teams all play a key role in building and maintaining a constructive and collaborative relationship with suppliers.
It’s also important for the purchasing team to serve as internal advocates for suppliers and ensure that the company presents an aligned voice back to the supply base. Alignment comes into play here because the partnership can begin to fully develop once everyone is working toward a common goal. Manufacturing companies should focus on the idea of profitable growth of all, allowing suppliers to grow profitably with the company versus the traditional idea of a “zero sum game,” where one needs to lose in order for the other to win. Once this idea is embraced, a true partnership can succeed.
Engagement
Engaging with suppliers very early in the design process is crucial. In fact, suppliers are in a position to have a unique perspective across all OEMs, and a strong relationship and partnership allows manufacturers to capitalize on those insights. Specifically, including suppliers early and throughout the process allows companies to leverage their knowledge and expertise, while learning from the best practices of the supplier, in turn allowing them to better serve their customers.
Companies should talk with suppliers about any issues and work with suppliers to come up with a collaborative solution. This will also build trust for both the OEM and supplier. By engaging with suppliers early and often, this will also ensure the relationship isn’t tarnished in the event that something doesn’t go according to plan. There may be times when an unexpected or unavoidable issue occurs, and engaging with suppliers in a collaborative way throughout the entire process allows both the OEM and supplier to have a plan in place and keep the relationship intact.
Fostering Strong Relationships
Companies must recognize the importance of fostering a true partnership between the supplier and OEM. If companies keep these best practices top of mind, at all levels within their organization, their supplier relationships can flourish. Of course, choosing a supplier, let alone managing the relationship isn’t always easy, especially for global companies, but it can be made less challenging by incorporating these three enablers. While there’s not a secret recipe for a successful OEM-supplier relationship, these elements are key to a strong foundation; they should be incorporated within the business model to create an improved experience leading to mutual success.
Hau Thai-Tang is Vice President of Global Purchasing for the Ford Motor Company.
