Of all the things that keep a business running smoothly – ample financing, strong products or services, effective marketing, an enthusiastic and professional team, and interested customers — we put supplier collaboration near the top of the list at ICAT Logistics Detroit.
When your suppliers are cordial and cooperating with you, one another and among themselves, there is no limit to what you can accomplish. When they’re at odds, competing for attention or resentful of how they are being treated, you and your customers are bound to suffer.
Organizational bliss doesn’t happen by accident. It takes consistent effort, nurturing, listening, and a willingness to make concessions to keep the crimps out of a supply chain.
Last week in this space we talked about vetting suppliers, and that is a first step. But once you’ve established a relationship the next step is to nurture and develop it.
At no time does that become more important than when economic conditions take a turn. You and your suppliers want to control costs and remain profitable. You want to keep your people working. It turns out you need each other more than ever before.
We have all seen or heard stories about the giant companies that make incredible demands on their suppliers when the economy goes south. The attitude can be: “We’ve been giving you a lot of business for years; now it’s time for you to pay your dues.”
Certainly that’s one approach. But here’s another that may be more effective: “Let’s work together to reduce our costs, share ideas, mutually trim our profit margin and work toward the future when with a better more streamlined system in place. We can increase our profits together when the economy returns to a growth mode.”
That way, we win together and the benefits are long term, especially when you focus on these areas:
Innovation: Under the gun to reduce costs, partners in the supply chain begin to discover areas of their operations that can be streamlined, or even eliminated. We have a client shipping heavy, oversize freight from the U.S. East Coast to China. Together we made minor time concessions to avoid frost laws on U.S. highways and changed the port of departure from Los Angeles to Norfolk, Va., to reduce the costs and documentation complexities of trucking oversize equipment across the entire country. Both of these changes reduced costs and were the result of open communication and thoughtful planning.
Trust: What supplier appreciates being “squeezed” and enduring all the pain when the economy is tight and business is slow? By recognizing one another’s need to survive and remain profitable — even if margins are significantly reduced — a supplier becomes a partner and the interdependence fosters confidence and trust. Our supplier relations have become the strongest and longest lasting when we listened, asked questions, explained our position and together embraced a plan that would accommodate the needs of both of our companies.
Reputation: Word travels fast in the industry when one company mistreats another. The same is true when companies bond. Often, in the most competitive of times, when our some aspect of our budgets have been reduced to nothing, it is our reputation that garners new referrals and keeps us on a growth trajectory.
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