| Critical and strategic suppliers are the ones who can | | | | 6. Set guidelines for communications. Particularly in the |
| deliver a mutual strategic benefit. They are often | | | | early days of your relationship with a critical or |
| placed in the strategic quadrant of your supply | | | | strategic supplier, there will be a level of suspicion and |
| positioning matrix (in other words, high value and high | | | | mistrust on both sides. This will erode over time as |
| risk or complexity) and see you as strategic in their | | | | you work together to deliver value. At the start, it is |
| supplier preferencing (it is a market that is important | | | | crucial that nothing is said or done that creates an |
| to them with you as a key account within it). The | | | | impression that one side is trying to get an unfair |
| level and intensity of supplier management efforts | | | | advantage over the other. To avoid this happening |
| for these suppliers is crucial to a successful outcome. | | | | inadvertently, it is vital that you have guidelines for |
| Here are ten tips for managing critical and strategic | | | | communications and even a clearing house to check |
| suppliers. | | | | communications with the other party before they go |
| 1. Agree a joint mission statement. This is a succinct | | | | out. |
| summary of the purpose of the relationship. It sets | | | | 7. Work on rising through 3 levels of performance. |
| out the overall goal you are trying to achieve and | | | | The most basic level of performance aims to remove |
| sets the general direction for the relationship. | | | | any variations of performance in delivering the |
| 2. Work on a mutual set of values. This sets out the | | | | product or service. Once this is achieved, you can |
| behaviours you expect people in both organisations | | | | work on improving performance through techniques |
| to exhibit and sets standards. These should be linked | | | | such as Lean and Six Sigma. The third level is that of |
| to the mission statement and are used as a guide to | | | | innovation. Your pipeline of opportunities should |
| the ways of working that are needed to deliver | | | | progressively move through these three levels. |
| mutual value. | | | | 8. Have the right metrics. Some of these will come |
| 3. Have a joint strategy. This is often called a key | | | | directly from the contract. Others should measure |
| account plan. It documents your joint-expectations in | | | | whether or not the relationship is capable of |
| terms of the level of business that will be done, | | | | delivering a good performance (by, for example, |
| pricing models and profitability levels, where and how | | | | using a modified version of an approach such as |
| mutual value will be generated and an outline plan for | | | | EFQM); whether that capability is translating into |
| achieving it. | | | | actual good performance (for example, quality |
| 4. Set mutually beneficial goals. These are an integral | | | | assurance and manufacturing cycle times); and |
| part of the joint strategy and set out expectations | | | | specific measures for improvement projects. |
| for what is to be achieved both in the short and | | | | 9. Use a performance dashboard. This communicates |
| longer term. Example goals could be to reduce the | | | | strategic objectives and enables people to measure, |
| purchase price by 10% in the next 12 months; reduce | | | | monitor and manage the key activities and processes |
| all sources of waste in the supply chain by 20% in | | | | needed to achieve their agreed goals. It monitors |
| the next two years; or re-design the product or | | | | critical processes and activities, enables people to drill |
| service to deliver a specific feature that delivers a | | | | down to root causes and facilitates decision-making. |
| specific benefit. | | | | 10. Accept that you win some, you lose some. Some |
| 5. Develop a pipeline of improvement projects. Your | | | | improvement projects that you do with your critical |
| strategy and goals will identify the areas for | | | | and strategic suppliers may at times benefit one |
| improvement or value creation. You now need to | | | | party more than the other. Take the view that over |
| develop a pipeline of projects that will deliver these | | | | time these will balance out. Do not expect to be the |
| improvements and value and allocate resources | | | | winner every time as this will quickly destroy the |
| (people and money). This is the way that you can | | | | relationship. |
| create momentum and a sense of value. | | | | |