The traditional buyer-supplier relationship has often been characterized by a zero sum game of a high stakes battle to the death where each party attempts to bully the other into acceding to his or her demands at all costs. In this situation the negotiation often swings the way of the dominant party but not without significant damage done to both sides of those conducting negotiations. This can play out in a variety of ways but the end result is always the same the customer loses out.
In today’s dynamic retail environment where the consumer has more choice than ever both buyers and suppliers have little time to spend arguing and butting heads in an adversarial relationship. In the context of the South African retail space with sales and margin under ever increasing pressure buyers and suppliers would be better off putting away their weapons and instead spending their time trying to foster collaborative relationships instead.
The key aim of forming collaborative buyer-supplier relationships is creating an improvement in communication. Why is this important you may ask? Improvements in communication are beneficial as they allow both parties to gain a more complete understanding of the challenges and opportunities of the businesses that they each represent. This is important as it allows them to meet each other’s needs more effectively. Some benefits include, but are not limited to:
Continual Improvement of Operations: Through collaboration the supplier and buyer can continuously devise ways to improve various systems in the value chain.
Timeous resolution of potential problems: Problems encountered on the manufacturing/distribution side of the supplier can be communicated timeously to the buyer ensuring that the buyer is well aware of any changes or disruptions in the supply chain and can inform their customers timeously resulting in fewer disgruntled customers.
All of these benefits ensure greater service, lower prices and fewer out of stocks for the customer and ultimately more sales and profits for the buyer and supplier.
The only way the buyer-supplier relationship can be sustained and grow is if each party has both an understanding of each other’s business needs and most importantly are WILLING to meet those needs. This is a key aspect to grasp as the success of one partner helps the success of the other. In the long run a healthy buyer and supplier relationship will provide a competitive advantage for both parties.
The views and opinions expressed in this article are solely my own and do not express the views or opinions of my employer