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June 17, 2015

Supplier Relationship review needs a long term vision?

Effective supplier relationship helps in continuous performance improvement through seamless delivery of products and services.

The industry has been witnessing an increasing trend of organizations investing on partnership models, which are strategic to the long term growth of their business. With increased challenge in managing complex partnership model, organizations have been relying more on Supplier Relationship Management (SRM).

Some of the key success factors across the different industry segments that contribute for an effective SRM are:

  • Trust
  • Effective shared Risk Management
  • Simplicity in structure of relationship
  • Co-innovation and sustainability

In the recent past, we have witnessed situations where the individual organizations have faced challenges in meeting their goals with the market changes.

Apple and Samsung battle in the recent past, has shown that both the organizations have lost their market share and have forced both the organizations to restructure their relationship, with Samsung setting up a multibillion dollar chip manufacturing facility exclusive for Apple and both dropping their patent lawsuits against each other. While Samsung had challenges on their profits moving south along with the stagnating mobile phones business, Apple has been witnessing increase of Android device market in developing nations.

The renewed relationship is expected to benefit both the organizations in expanding their business by rebuilding on trust, long term commitment and co-innovation.

In the case of major automobiles companies such as Honda and Toyota, there has been major recalls of their vehicles due to faulty airbags from Takata.  Takata was their key supplier for airbags, and for many of the other automobiles companies. The recalls due to faulty airbags of Takata has had a major effect on the trust and confidence on the brands - Toyota and Honda coupled with regulators pressing for revision and adherence to safety standards and quality test methods.

Effective supplier relationship helps in continuous performance improvement through seamless delivery of products and services considering the key factors listed above. Apple has been able to have a seamless operations even when the supplier broke down prior to iWatch launch, they could identify and move to another supplier.



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