4 steps to rebuilding customer-supplier relationships
By Justin Brown
Many customer-supplier relationships were weakened or damaged during the economic downturn. To rescue them, both sides need to acknowledge past mistakes, identify the causes of those problems, take corrective action, and monitor the results. As of this writing, all signs are pointing toward recovery, and economic indicators (take your pick) are suggesting a better ending to 2010 than we experienced in 2009. Optimistic whispers in the first few months of this year became clearly audible announcements when Quarter 1 earnings were released. Demand is on the rise, slashed capacity is beginning to fill up, and at many companies, earnings will exceed expectations. Despite the fact that business is improving in most industries, companies will continue to struggle for some time to overcome the effects of the recession on their supply chains. This is especially true for those that made drastic decisions and acted in ways that altered their supply chain capacity and supplier services. Customer-supplier relationships have been caught up in this turmoil and have often suffered as a result. The economic upheaval of the past 18 months has left many relationships weakened, damaged, or even severed. With demand increasing, now is the time for buyers and suppliers to assess the current state of their relationships and then address or resolve any concerns. This can be accomplished through a four-step process that includes acknowledging what has happened, identifying the causes of any problems, agreeing on and implementing corrective actions, and following up and maintaining the improved relationship. These steps should be carried out within your company's supplier relationship management (SRM) program. SRM is a formalized process through which companies build strong, collaborative relationships with their vital suppliers to make improvements and achieve their mutual supply chain goals. If you do not already have a formal SRM program, then following these steps can serve as the foundation for this type of initiative. Customers and suppliers that adopt this process and commit to continuing it in the future will not only reaffirm and strengthen their partnerships but will also ensure that they create an effective, flexible supply chain. Step 1: Acknowledge past mistakes
Start out by evaluating your current relationship with your most critical suppliers. This assumes that you have already segmented your supply base and identified your most important suppliers. You can follow this process for all suppliers, of course, but to maximize the value of your efforts, it's a good idea to address the most essential suppliers first. Once the top suppliers have been singled out, you can assess the current state of your relationship with each of them individually. The most important part of this first step is to identify and acknowledge the mistakes that were made on both sides. Ask the following questions and examine your answers carefully: Is this relationship in turmoil? If so, what were the actions that created this tension, and why were those actions taken? What were the outcomes of those actions, and what position are you or your suppliers in now as a result? How does the supplier feel toward you, and how do you feel toward the supplier? Do you deem the relationship to be weakened, damaged, or severed? Is the relationship meaningful for your company, and will improving that relationship bring value to both parties? By answering these questions, you will define the roadmap toward reconciliation and improved effectiveness—or to accepting a separation, if that proves necessary. Once you have determined that the relationship is worth repairing or saving, it is time to pursue open and honest communication with that supplier. Integrity and trust are the basis for any relationship, and addressing difficult topics in a frank and objective manner will be appreciated by everyone...
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