The strategic value of suppliers has been growing, and so has the need to rely on their performance and partnership. Supplier collaboration serves as the foundation for supply continuity, agility, risk management, and resilience when disruptions occur. Making key suppliers more like business partners than cost-reduction entities. 

Getting strategic about supplier collaboration positions you to succeed today and overcome tomorrow’s unexpected challenges. Your goal might be to transition from purely traditional buyer-supplier business arrangements, fine-tune strong supplier relationships that yield average results, or something in between. Regardless, the following nine key strategies can add to your competitive edge. 

1: Establish Clear Communication Channels 

Collaboration fails without communication. To avoid communication gaps from the start, you can lay the groundwork for collaboration with comprehensive supplier onboarding and enablement using a fee-free network that welcomes new suppliers. A dedicated supplier portal connecting buyers and suppliers can provide a basic communication venue.   

Beyond this are more challenging activities such as complex eSourcing events. In this situation, you might choose to leverage Expressive Bidding, which creates a collaborative marketplace where buyers showcase their capabilities and buyers provide real-time guidance that results in more competitive and advantageous bid responses. 

2: Invest in Relationship Management

Supplier relationship management (SRM) can foster a culture of transparency between businesses and their suppliers. This establishes a foundation for streamlined collaboration. Supplier performance management (SPM) helps identify opportunities and areas for improvement, leading to supplier development. Both SRM and SPM come under the umbrella of holistic supplier management.  

Supplier management tools enable you to determine which suppliers are business-critical and cultivate mutually beneficial business relationships. For example, a manufacturer of embedded technology cares more about microchips than plastic coatings.  

You can also lower bottom-line costs and increase top-line value. Working collaboratively to develop key suppliers enables you to initiate improvements in, cost reduction, cost efficiency, improved product quality, shorter lead times, and advanced technology.  

3: Set Common Goals and Objectives 

Meaningful and mutually beneficial relationships with suppliers are reinforced by common goals and objectives. Data collected through a best-in-class supplier management solution enables you to create synergies and start conversations around shared business goals. These may also emerge during contract negotiations and any supplier development programs, resulting in more favorable terms with more reliable suppliers. 

4: Build Mutual Trust Between Partners

Trust enhances supplier collaboration—and effective, consistent collaboration strengthens trust. As these reinforce each other, efficiency and alignment improve across your supply chain operations.  

Although confidence across supplier relationships grows over time, various best practices can foster mutual trust in your supply chain partnerships:  

• Sourcing strategically and selecting reliable and trustworthy partners from the start 
• Implementing advanced data protection and privacy measures 
• Leveraging a centralized platform with a single source of truth accessed by all parties 
• Following through on corrective interventions when issues arise 
• Establishing longer-term relationships with suppliers with a reliable track record 
• Serving as a trusted role model for partners by collaborating transparently and effectively using your established tools 
• Gaining visibility into your Tier-1, Tier-2, Tier-3 and sub-tier suppliers 

 5: Encourage Regular Feedback and Communication  

Automated, streamlined, and fast-tracked processes have increased the pace of business. Intentional feedback and communication brings a balance that can mitigate communication breakdowns and reinforce relationships.  

Many suppliers struggle with communication. According to a recent State of the Supply Side Survey, 70 percent of suppliers surveyed spend more than 10 hours weekly responding to buyer communications and RFP and RFI requests. For the 32 percent who spend over 25 hours a week, the time consumed cost more than $260,000 annually. 

Is it possible to lighten this load? Leveraging a network that allows suppliers to conveniently manage their profiles helps reduce technology requirements suppliers encounter. Furthermore, you can provide assistance through efficient communication and encouragement combined with SRM or supplier development.  

6: Leverage Technology for Streamlined Processes  

With an intelligent, purpose-built source-to-pay (S2P) and supplier collaboration platform, you can cover every aspect of your end-to-end S2P lifecycle. Supplier management data and capabilities integrated across the platform extend to all functions as well as ERP accounting systems.  

For organizations that implement collaborative tools and platforms, executing on supplier collaboration strategies becomes easy. Automating processes with artificial intelligence (AI) technology further streamlines effective supply chain collaboration by facilitating more transparent supplier communication and saving time for both buyers and suppliers.  

7: Utilize Analytics for Informed Decision-Making 

Expertly designed strategic analytics makes extremely large amounts of data useful so your procurement teams can accelerate and improve decision-making.  

When embedded across all solutions with actionable dashboards for making strategic business decisions, predictive, prescriptive, and advanced analytics deliver valuable insights. This increased visibility helps organizations select the most competitive suppliers for sourcing events, evaluate and identify top-performing partners, and understand where supplier development is needed. Analytics also provide clarity on the likely outcomes of decisions, offering comparable alternatives when a strategic supplier fails. They help address underperformance with targeted metrics, discover opportunities for cost savings, and refine strategic planning for future sourcing strategies. By identifying and evaluating supplier risks, these tools ensure procurement teams are equipped to make agile, data-driven decisions that strengthen the entire supply chain. 

8: Share Risk for Joint Success 

Risk has increased across supply chains in recent years. Supplier risk should be evaluated according to the value—not price or spend volume—a supplier adds to your organization and the business risk involved if supply is interrupted. Supply chain partners such as EcoVadis, Dun & Bradstreet, TealBook, carbmee, Sphera, and Prewave can help determine a supplier’s risk level.  

Sharing risk with suppliers through open communication and transparency sets the stage for resolving concerns and mutually addressing them through SPM and supplier development. The result is stronger partnerships that are better equipped to overcome challenges collaboratively. 

9: Promote Innovation through Collaboration

Supplier partners can be segmented into strategic, approved, and basic suppliers. Working with strategic suppliers to identify problems and inefficiencies may reveal solutions that lead to innovation with suppliers and grow the business. For example, collaborating with innovative suppliers on new product development has enabled manufacturers to find ways to set premium pricing and open new revenue streams. 

When assessing supplier performance, key performance indicators (KPIs) often include quality and on-time deliveries. Adding a KPI for innovations, co-designing products, or new go-to-market channels creates positive expectations for collaboration and helps emphasize continuous improvement practices. 

Reaping the Benefits of Supplier Collaboration  

Collaborating closely with suppliers can generate new value while establishing supply continuity. Increased efficiency, quality improvements, improved time-to-market, innovation, and higher customer satisfaction levels help you maximize ROI. 

Named to Procurement Magazine’s Top 10: SRM Platforms list in 2024, JAGGAER is is committed to helping our clients drive competitive advantage through improved supplier collaboration.