DEVELOPING AND MAINTAINING

SUPPLY CHAIN
RELATIONSHIP
Relationship
TO FACE

COMPETITION
If you are only measuring your procurement
department on what has been saved, youre missing
out on half of what suppliers can do. Theyre not just
cost centers anymore; they are partners. Suppliers can
bring new technology, innovation and process
improvement suggestions that can reduce time to
market or improve the value you deliver to customers.
These are opportunities that can drive incremental
revenue in some direct or indirect way.

-Jonathan Hughes, Vantage Partners

Supplier relationship can provide many benefits such as
flexibility in terms of delivery, better quality, better
information, and better material flows between buyer and
suppliers.

Companies are realizing the importance of developing win-

win, long term relationships with suppliers. It is critical that
customers and suppliers develop strong relationship and
partnership based on a strategic rather than a tactical
perspective and then manage these relationship to create
value for all participants.
Developing Supplier Relationships:
Building strong partnership relationship require a lot of
hard work and commitment by both buyer and seller.

Top 08 reasons for failure of alliances:

1. Overly optimistic
2. Characterized by poor communications
3. Lack of shared benefit
4. Slow payback result
5. Lack of financial commitment
6. Misunderstood operating principles
7. Lack of alliance experience
8. Cultural mismatch
Several key ingredients for developing successful
partnerships are:

1. Building Trust
2. Shared Vision and Objectives
3. Personal Relationships
4. Mutual Benefits and Needs
5. Commitment and Top Management Support
6. Change Management
7. Information Sharing and Lines of Communication
8. Capabilities
9. Performance Metrics
10.Continuous Improvement
Supplier Evaluation and Certification:
Only the best suppliers are targeted as partners. Companies want
to develop partnerships with the best suppliers to leverage their
expertise and technologies to create a competitive advantage.
Learning more about how an organizations key suppliers are
performing can lead to greater visibility, which can provide
opportunities for further collaborative involvement in value- added
activities.
The Weighted Criteria Evaluation System
The Weighted Criteria Evaluation System (Cont.)
One approach toward evaluating and certifying suppliers is to use the weighted criteria evaluation
system described below:
1. Select the key dimensions of performance mutually acceptable to both customer and supplier.
2. Monitor and collect performance data.
3. Assign weights to each of the dimensions of performance based on their relative importance to
the companys objectives. The weights for all dimensions must sum to 1.
4. Evaluate each of the performance measures on a rating between zero (fails to meet any
intended purpose or performance) and 100 (exceptional in meeting intended purpose or
performance).
5. Multiply the dimension ratings by their respective importance weights and then sum to get an
overall weighted score.
6. Classify vendors based on their overall scores, for example:
Unacceptable (less than 50)supplier dropped from further business
Conditional (between 50 and 70)supplier needs development work to
improve performance but may be dropped if performance continues to lag
Certified (between 70 and 90)supplier meets intended purpose or performance
Preferred (greater than 90)supplier will be considered for involvement in new product
development and opportunities for more business
7. Audit and ongoing certification review.
ISO 14000 ISO 9000
There are eight quality management principles on which the quality management system standards
of the ISO 9000 series are based:
Principle 1Customer focus: Organizations depend on their customers and therefore should
understand current and future customer needs, should meet customer requirements
and strive to exceed customer expectations.
Principle 2Leadership: Leaders establish unity of purpose and direction of the organization.
They should create and maintain the internal environment in which people can
become fully involved in achieving the organizations objectives.
Principle 3Involvement of people: People at all levels are the essence of an organization, and
their full involvement enables their abilities to be used for the organizations benefit.
Principle 4Process approach: A desired result is achieved more efficiently when activities and
related resources are managed as a process.
Principle 5System approach to management: Identifying, understanding and
managing interrelated processes as a system contributes to the organizations
effectiveness and efficiency in achieving its objectives.
Principle 6Continual improvement: Continual improvement of the organizations overall
performance should be a permanent objective of the organization.
Principle 7Factual approach to decision making: Effective decisions are based on the analysis of
data and information.
Principle 8Mutually beneficial supplier relationships: An organization and its suppliers are
interdependent and a mutually beneficial relationship enhances the ability of both to
create value.
Customer Relationship Management:
Simply, customer relationship management refers
to building and maintaining profitable long-term
customer relationships.

Managing the relationships among people within

an organization and between customers and the
companys customer service representatives in
order to improve the bottom line.
Designing and Implementing a Successful CRM Program:

- Creating the CRM Plan

- Involving CRM Users
- Selecting the Right Application and Provider
- Integrating Existing CRM Applications
- Establishing Performance Measures
- Training for CRM Users

Recent Trends in CRM:

- Customer Data Privacy
- Social Media
RELATIONSHIP MATRIX:
4 categories of relationships:
More formal Less formal

Litigation Arbitration Mediation Negotiation