Suppliers Relationship Management:

For doing any sort of physical business, material input plays a vital role. In order to getting the physical material in to our premise or any pre-agreed site, the role of suppliers is quite pivotal. For me supplier is also a business partner who needs to be taken care of strategically and here comes the supplier relation in to picture. Let me explain this:

Many a times we have experienced due to the demand uncertainty or the bullwhip effect, the buyer and the organization in need are in very awkward situation. If they don't get the material timely the OIH will be soon converted in to back order and this will create a huge pressure afterwards. Finally it will give rise to Customer dissatisfaction and the future orders may get eroded.

If we have maintained a good rapport with the suppliers and we have considered their issues as ours and helped them in resolving their business issues, they can give a helping hand at the time of crisis and the buyer and the organization as well can be benefitted in getting timely deliveries. So building a cordial relationship with all suppliers and sustaining it for longer can be very fruitful.

The relationship between businesses and their suppliers is critical. Supplier Relationship Management refers to a systematic approach a business takes in analyzing its suppliers' capability and capacity, in order to determine their value contribution and therefore, the extent of collaboration required - moving forward.

This special kind of relationship is mutually beneficial, bound by the sharing of market insights, new trends and strategies that do not only provide competitive advantages but customer satisfaction, retention, loyalty and lasting success - for both parties.

Based on their value contribution, suppliers can be grouped in to three main categories, namely: -

- Transactional:

Regular vendors for routine supplies.

These are usually suppliers of low budget items that are easily found or readily available on the market.

- Collaborative: These are suppliers important items and with whom a business engages on regular basis. This is in pursuit of improved quality of supplies at a minimum possible cost.

This is a mutually beneficial relationship that usually leads to operational efficiency, effectiveness and improved productivity for both parties.

- Strategic: This is a long-term supplier, or one that provides the business with critical material, product or service that can not easily be found on the market.

Strategic suppliers are so vital that where possible a backward integration is recommended.

*Backward integration (vertical integration) is when a business merges or acquires (merger & acquisition) its critical supplier.

In other words, moving the supply process in-house, thereby taking full control of the production of a critical or input supply.

There are several benefits Supplier Relationship Management brings, including:

- supply process visibility and supplier performance,

- reduced risk,

- improved communication,

- enhanced collaboration on innovation,

- increased operational efficiency,

- improved negotiation power,

- competitive advantages,

- optimal productivity and

- increased customer satisfaction.

For a business, Supplier Relationship Management particularly with key suppliers (Collaborative and Strategic) is not optional, but a critical undertaking for lasting success.