I recently wrote an article on how to effectively manage supplier relationships in the heyday of procurement and contract automation software.
Don’t get me wrong, software is a necessary part of the big-picture supply chain solution. But, I think that should be balanced with a focus on education and relationship-building with suppliers.
For example, if purchasing experts are thinking of using supplier penalties to get the most out of their suppliers, they should consider using incentives to make the relationship more than a one-sided deal. Wal-Mart is well known for being King of the one-sided supplier penalty game. But what if you’re not Wal-Mart? Suppliers can take their business to one of many other buyers.
On my blog at Software Advice, I recently wrote an article on this topic. I also talk about the need to increase performance visibility and communication with suppliers, the necessity of creating escalating expectations, the need to focus on high-risk suppliers, and to consider a supplier’s industry when establishing performance indicators and penalties/rewards.