Your organization spends hours working with suppliers to find the optimal balance of price and material grade. You negotiated, compromised, sent RFQ’s and placed PO’s. In the past, many companies didn’t communicate with their suppliers until the next order or delivery was needed.

Not anymore. Surveys tell us that the attitude toward supplier relationships has changed over the past decade. Companies are now realizing the importance of leveraging strategic relationships with their suppliers. In a poll taken in 2016, 63% of procurement professionals had improving collaboration with suppliers as one of their top KPIs for the year.

In today’s competitive market place, I would argue that on some occasions your supplier choice is as important, if not more important than your material choice.

Knowledge is Key

You may want to think of your suppliers as sources of information as well as sources of product. Most suppliers have knowledge of their competitor’s product as well as their own. Suppliers typically receive extensive product training and can be a great resource of new innovations in your industry. They are likely to be open to providing their own alternative solutions or products that could decrease your costs, increase your quality, or could provide new product innovations.

Compete with Innovation

Your suppliers are consistently innovating with both materials and processes. While some of these innovations may have reached your company, you don’t know what you don’t know. Take some time to ask questions about other processes or techniques that could save your company the headache of figuring it out on your own. Leveraging your supplier as a center of influence will provide you with information you may not have received as a transactional buyer.

As a center of influence, your suppliers will be able to keep you up to date on innovations that have occurred with other customers. This will allow you to leverage other organizations learning opportunities.

Strategic Relationships Create Value

Strategic relationships have the potential to create value for you in many ways. With a customer/supplier relationship the benefits can be both financial and strategic. In its most basic form, a strategic supplier could provide your company with volume discounts, ensure your deliveries arrive on time, and work with you to lower inventory costs.

It is important to realize that as your company grows, you become a larger part of your supplier’s revenue, and in doing so, the success of both companies become intertwined. This is the point where strategic value is jointly created. This value is created by sharing innovation or by jointly creating new ideas. In some cases, one party may financially assist a big growth move that could jointly impact both companies. Regardless of the way the value is created, a synergy is helpful to organic growth and can be fueled by factors outside of your company.

These are just three of the many reasons to reevaluate the relationship you have with your suppliers. Your supplier choice should be as important as your material choice. More and more companies are leveraging their supplier relationships to enhance competitiveness in an ever-growing marketplace