Are your suppliers out to get you?

The giant supplier is coming down the hill looking for the timid buyer and crying out “Fee, fie, fo, fire, I smell the blood of the timid buyer (give me a break, can you find a better word to rhyme with buyer?!)” while the buyer is quaking in the bushes hanging on for grim death to his golden goose (sorry, budget). 

OK, so plagiarising Jack and the Beanstalk doesn’t entirely work in depicting how relationships work between suppliers and buyers.  But to judge by some buyer behaviour you would think it was true. 

This then begs the question, “Why do you need supplier relationships at all?”

 “No firm is an island. Your customers depend on the excellence of your suppliers … Top firms create supplier alliances to ensure that their customers return” says Professor Daniel T. Jones

The quote from Professor Jones succinctly demonstrates that organisations can no longer operate in isolation, if indeed they ever could. The question is who should be your alliance partners? 

Even with initiatives such as supplier base consolidation, large organisations in particular typically will still have several thousand suppliers. Obviously, you can’t form alliances with all of them. You will need to segment your suppliers in order to identify the ‘critical few’ that merit some form of alliance or partnership working. 

Even without this kind of analysis, some suppliers will immediately stand out as worthy of some kind of closer working relationship. These include:- 

• Suppliers to whom you have outsourced part of your organisation

• Joint ventures in which you share assets and resources to create value

• Critical services or materials without which your organisation cannot function.

The implications of poor performance from these types of supplier can be devastating.

So, what do you think?  Is SRM just some fad dreamt up by consultants with new methodologies to peddle or suppliers who want to “get one over on you”.  Post your thoughts.