Supplier relationships are at the heart of manufacturing performance. By selecting and developing the right suppliers and establishing streamlined, transparent communication with them, manufacturers gain the agility and resilience to respond to customer demands, rise to the top, and navigate disruptions more easily. That’s why supplier collaboration—that consistent, trusted, and responsive interaction between supplier and manufacturer—is pivotal to manufacturing success. 

Supplier Collaboration vs. Supplier Relationship Management 

What good is having the best suppliers if you can’t communicate well enough to leverage their products and skills? Supplier collaboration is the process of connecting and working together with supplier partners to achieve your business goals and initiatives. The quality, timeliness, and transparency of that collaboration can have a dramatic impact on manufacturing performance.   

Supplier collaboration is a business essential. Supplier relationship management (SRM) lays the relational groundwork to help make supplier collaboration happen more effectively and with increasingly profitable results.  

SRM is a systematic approach to evaluating vendors that supply your organization with goods, materials, and services, then implementing strategies to develop those suppliers and improve their performance. The primary goals of SRM are to foster hand-in-glove supplier relationships, manage risk, and optimize the value chain. In the case of conflicts with suppliers, SRM can recommend corrective actions.  

Supplier Collaboration for Agility 

Your world is characterized by dynamic market conditions, shifting customer demands, new technologies, rapidly changing regulations, and frequent supply chain disruptions. That makes agility a foundational part of your manufacturing strategy. In times of pressure and crisis, highly responsive and trustworthy suppliers make agility possible. 

From routine product sourcing to new product development, the benefits of strong supplier collaboration are many: 

• Reducing costs and delays 
• Utilizing full supplier capabilities 
• Raising the bar on product quality, innovation, and supplier performance 
• Establishing supply assurance and continuity 
• Limiting and managing supplier risks 
• Improving supplier responsiveness 
• Increasing visibility into supplier capacity 

With real-time collaboration across all supply chain partners, you receive faster supplier responses, better shipping, order acknowledgment tracking, and clear non-conformance reports. The result is improved business processes and the agility that makes you nimble—whatever comes.  

Strategies for Building Resilient Supply Chains 

Recurring disturbances in recent years have highlighted the need for manufacturers and contract manufacturers to build resilience into their supply chains. This resilience can be defined as “the ability of a central procurement and supply management function to prepare for unexpected events, respond to disruptions, recover, and emerge even stronger.”  

Manufacturers cannot foresee every risk, inconvenience, or disaster, but they can equip themselves to handle the unexpected and come out on top. Decision-makers must plan supply chain resilience strategies for a wide range of risk scenarios. These include crises such as the 2020 pandemic as well as structural changes in supply markets like the effect of domestic electric vehicle (EV) loans and subsidies on critical metals availability. 

Building resilience requires clear communication with your supplier base. This is a team sport where collaboration is required, so manufacturers should avoid power games against their key suppliers. 

Resilience-building strategies involve four key areas:  

• Technology and product materials: Businesses can lay the foundation for resilience by reducing complexities at the research and development (R&D) stage. Following widely-known standards keeps your vendor options open so you’re not locked into sourcing from a small pool of specialty suppliers that can negatively impact time to market.  
• Value chain: Transparency in operations and across multiple supplier tiers gives you visibility into potential gaps in supply continuity. Information sharing through supplier collaboration supports effective inventory management and enables you to plan proactively while identifying risks such as shortages and delays. 
• End-to-end planning: The ability to rapidly assemble cross-functional teams from sales and operations to supplier management and procurement empowers you to prepare your supply chain for immediate action in a crisis. Enterprise-wide data sharing capabilities help you distribute vital information quickly. 
• Finance: Resilience depends on financial flexibility. By making your CFO and investors aware of the need for options to free up cash, you can help your suppliers get paid early and increase their resilience as well. 

Embracing digital transformation facilitates resilience in all four areas. Cross-departmental access to a single version of the truth gives you a more accurate picture of where you stand in light of where you need to be, both during and after a disruption. Such access also helps your entire supply chain deliver a unified response.  

For manufacturers, business decisions that involve digital transformation in procurement are often difficult. However, a world-class provider can guide your organization on a journey of improvement. Measurable successes result that include metrics such as margins, profits, production targets, quality scores, environmental, social, and governance (ESG) scores, and customer satisfaction. 

Selecting Capable Partners 

Supplier selection is an activity you want to get right the first time. The ideal criteria for partner selection encompasses both pricing and non-pricing details to pinpoint suppliers that are aligned with your goals. With the right supplier management tools, you can empower your procurement team to assess suppliers based on critical factors such as risk, sustainability, and real-time performance.  

A leading strategic sourcing solution should give you a 360° view. To find the best value, your team can auto-score suppliers and receive automated event recommendations. When all evaluation and selection activity is in one place, selection is more intuitive and efficient.  

You can further hone your capabilities in certain selection scenarios with a dedicated solution such as the Advanced Sourcing Optimizer. This system enables you to minimize costs and make your sourcing professionals more strategic, productive, and efficient, particularly when it comes to complex eSourcing events. Advanced Sourcing Optimizer helps manufacturers improve their relationship with suppliers, achieve ESG goals, and make profitable award decisions faster.  

Traditional sourcing decision criteria such as reduced costs should also make room for agility and resilience. For example, regionalizing EV battery manufacturers or suppliers of microchips in lower-risk countries can decrease dependencies, yielding advantages even if the manufacturing costs of the new suppliers are higher. 

The importance of proactive engagement with suppliers should not be underestimated. Quickly verifying supplier capacity and potentially choosing alternate suppliers can help you keep pace with production timelines. 

Common Challenges in Supplier Collaboration 

Obstacles and challenges manufacturers face in supplier collaboration range from issues on the suppliers’ side to concerns manufacturers themselves need to address: 

• Supplier technology limitations: 32% of respondents to a recent State of the Supply Side Survey said they spent more than 25 hours a week on buyer communications, RFPs, and RFIs. Your procurement team can respond by prioritizing efficient supplier collaboration combined with SRM to facilitate easier and more consistent engagement. 
• Data management issues: Recent legislation and consumer pressure require you to maintain comprehensive information about your entire supply chain. Centralizing data from internal and third-party sources increases transparency and can even reduce operating costs
• Supplier communication breakdowns: In volatile operating environments, suppliers are tested. Performance and stability can waver. SRM and supplier performance management (SPM) on a cloud-based platform allows smoother communication and visibility for all parties.  
• Industry-related concerns: As seen in the following examples, additional supplier collaboration challenges may emerge depending on your industry:  
• Automotive: To avoid recalls, a greater focus on quality and strategic supplier relationships is required as opposed to price and cost efficiency. 
• Banking: Typically, a bank’s suppliers are also its customers. Potential conflicts of interest abound for individual employees, departments, and the bank. 
• Clothing and fashion: Shorter collection lifecycles call for rapid product development. Some of the risks in this industry include volatility in commodity markets, geopolitical unrest, the need to adhere to ethical standards, and reputational damage. 
• Construction: Multi-tier supplier certificates must be managed effectively, and integration with sales and calculation tools can be very advantageous. 
• Food and beverage: This sector is subject to many regulations as well as unpredictable weather changes that impact inventory levels due to crop growth and harvesting cycles. 
• Public sector: In some countries, supplier identity, diversity definitions, tracking, reporting, and regional nuances can be critical for supplier management professionals. 

 Leveraging Technology for Enhanced Collaboration 

Elevating manufacturing performance through supplier collaboration is best accomplished with leading-edge technology, which in turn can help you address a number of related business issues.  

A fully digitalized source-to-pay (S2P) process, optimized by Artificial Intelligence (AI), with a centralized platform and single source of truth enables integration, streamlining operations. For this reason, a modern, holistic supplier collaboration solution should not be a standalone system, and the data should not be siloed. Integration with sourcing, eProcurement, payments, contracts, category management, and other S2P functions—as well as ERP accounting systems—is essential. These functions are supported by access to critical supplier information across the S2P cycle:  

• Supplier profiles 
• Performance data 
• Risk factors 
• Transactions 

When selecting a S2P platform to enhance your supplier collaboration strategy, ensure it includes a network to connect manufacturers and suppliers with integrated cloud-based solutions. A fee-free network empowers you to start partner relationships cost-effectively by using the network to onboard new suppliers.  

Ideally, an experienced supplier enablement team will handle supplier setup to get the connecting technologies in place. When suppliers complete their own registrations and maintain their own pricing, catalogs, and availability, it frees up time for procurement professionals. Collaborative tools and supplier management capabilities drive additional value by improving decision-making, helping your team form deeper business relationships with suppliers, and reducing support calls. 

Technology that facilitates advanced supplier collaboration and cooperation leads to greater stability, openness, transparency, and efficiency in supplier relationships.