When it comes to business, companies aim to maximize their own objectives, such as sales and margin rates. However, when we look at companies that managed the recent disruptions effectively, we see that those who adopt a musketeer mentality with their business partners ended up doing better than the rest.
Unity brings resilience: A collaborative supply chain lets businesses grow together with vendors, improving the efficiency and visibility of the supply chain. In most cases, companies collaborate with the largest supplier since they assume that the largest supplier would provide the greatest value. But in practice, a smaller partner may have been involved better in your orders and bring greater value with a better relationship. How would a business know which one to choose?
Vendor collaboration is a joint effort that creates a competitive advantage for suppliers and buyers. It reduces overall costs, errors, and inefficiencies for everyone involved. Vendor collaboration can be approached from an Operational and Strategic perspective. The operational level is about how POs are relayed to suppliers, and the tactical level is about tracking supplier performance and sharing it with them. There are different types of collaborations, and the most common ones include:
Vendor Collaboration tracks lead times and vendor scores to provide greater visibility over operations. These abilities make the organization resilient in response to disruptions and changing customer demand. The system tracks OTIF (on time, in full) rates and evaluates vendor scorecards for suppliers, which helps you to determine how each supplier is performing. This gives you the advantage of seeing the big picture with its details. This way, it is possible to detect supplier-related problems and respond quickly.
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