Ever since Just-in-Time manufacturing processes took the manufacturing world by storm in the late 20th Century, relationships between suppliers and their customers have become a strategic imperative for enterprises that wish to continually innovate product and process development.
Somehow, though, the folks running the day-to-day relationship between the two parties keep getting left out of the conversation, which may be one reason ?strategic supplier partnerships? don?t always work out.
Consider this post on the Harvard Business Review, that makes the point rather clearly:
?Every single innovation conversation I?ve had recently with business unit leaders, product managers and/or marketing executives invariably focuses on the importance of partnership and collaboration with their best suppliers and vendors. If anything, they wish their suppliers came forward with even more actionable and innovative ideas.? Conversely, I have not had one conversation with a procurement executive or officer for whom an innovation partnership with vendors was mentioned as a corporate priority. What a disconnect!?
The author, MIT?s Michael Schrage, goes on to use words like ?schizophrenic? and ?dysfunctional? to describe this situation. He is right: If CPOs don?t have a seat at the table when supplier relationships and joint projects are worked out, how can the company benefit from the intimate supplier knowledge the CPO has, and how can the CPO support a collaborative relationship without understanding how it was built, and how it is to be paid for?
Is procurement leveraging cloud-based interactive and collaborative tools just as much as any other department to make itself a stronger supporter of the organization?s mission. Without the clear understanding of how the supplier relationship has changed at the top, however, it will keep plugging away at beating down the supplier to keep costs down, which ends up working against the ?innovative collaboration? being fostered upstairs!
What has your experience been? Is Procurement considered an operational tail wagging on the corporate dog, or have you been relied on to help manage suppliers strategically? How has that opportunity played out?