21 September 2006

Collaborative relationships are the key to getting the most value from your supply chain, according to Professor Richard Wilding.

The Cranfield University lecturer in supply chain risk management was speaking at an event last week hosted by consultancy Symbia.

He said supply chain management was all about managing relationships and those managing the chain should hold discussions with suppliers that tackle small things that can build trust, such as issues of time rather than concentrating on cost.

By sharing information about how you work and learning how your suppliers work, he continued, buyers can take a lot of cost out of the system while also building trust and creating transparency.

He said by doing these kinds of exercises most companies get big cost savings: "If you have transparency you can reduce inventory."

He said businesses he'd worked with saved 2.7 per cent on average as a result.

Wilding said the top 25 per cent of companies selected for profitability shared particular characteristics, including a focus on building relationships internally and externally that assist competitive advantage, as well as open communication.

He added that those managing the supply chain must decide what type of relationship they need with suppliers - partnership, arm's-length or joint venture - and then identify what they need to do to maintain it.

He suggested co-operation, co-ordination and collaboration were fundamental, together with trust, transparency and a focus on time.

SMsep2006