How supplier collaboration can help businesses weather the Covid-19 storm
Containment, isolation, delay, contingency, cancellation are not words you would normally associate with successful supplier relationships but with the continued spread of Covid-19 these are the realities facing businesses while governments around the world attempt to limit the impact of the virus.
Over the last few weeks most businesses will have found themselves creating, refreshing or enacting continuity plans to ensure they continue to meet the expectations of their customers. Your suppliers are no different and it might not be possible for them to meet the expectations of all their customers. Inevitably as disruption continues and business impact increases, suppliers will take decisions as to which customers are given priority.
What happens if your businesses performance is dependent on critical supplier relationships? You will want to be one of the customers given priority. Contrary to common perception, suppliers do not just prioritise based on customer profitability (though it does play a part of the decision). Suppliers will consider the total value of the relationship when they make priority calls. Customers who actively invest in the relationship and collaborative activities will differentiate themselves from competitors.
So, what can you do to differentiate your business?
Motivate – If your critical suppliers share in your business success, intrinsically they will be motivated to prioritise you as a customer. Ensuring your contract, executive engagement and operating procedures are based on shared goals, will mean that when supplier relationships are tested, they have the foundations to weather the disruption. How can you help motivate your critical suppliers?
Positive recognition of strong performance helps build a relationship. Offering to provide written references, video blogs and supplier advocacy in exchange for strong and continued performance will differentiate you from other clients.
Aligning supplier remuneration to attributes or outcomes which reflect your businesses success measures will help motivate suppliers to do the right things for your business.
Continued and structured executive engagement. When your CEO needs to call his counterpart to ask the supplier to go the extra mile, you don’t want it to be their first conversation.
Plan – Practice makes perfect. Developing detailed joint contingency plans with your critical suppliers is essential. However, if the next time they see the light of day is when they are taken out of the draw and enacted, their effectiveness will be diminished. Businesses should consider:
Refreshing contingency plans with critical suppliers frequently, not just annually but when new risks emerge.
Joint testing of contingency plans with critical suppliers on a periodic basis. Investing time and resources into joint simulation testing will increase the validity of the contingency plan but also increase the likelihood it is enacted correctly.
Undertaking supplier assurance activities throughout the entire life cycle of the relationship to ensure critical suppliers have adequate and frequently tested continuity plans of their own.
Communicate – Covid-19 is likely to bring into stark reality the value of distributed and remote working and whether businesses have the right tools to support this. It is highly likely that customers and suppliers will have to accept a significant reduction in face-to-face interaction.
From secure file sharing technology to collaborative video conferencing tools, what your business needs will be different to every other business. However, it is vital that the tools your business chooses to deploy are cognisant of your critical suppliers. Ensuring that critical suppliers are adequately licensed to utilise the tools and that tools are leveraged frequently in BAU will increase the propensity for these tools to bridge the communications gap when disruption occurs.
Strong supplier relationships are based on collaboration.
The outcomes of supplier collaboration should be a motivated supplier, who recognises how to support your business and has the tools and relationships to do so. Investing in supplier collaboration won’t just realise benefits when business is good, it could prove vital for maintaining supply chain resilience when disruption becomes inevitable.