One of the critical key success factor in determining the effectiveness of a Supply Chain Management is the approach of negotiation between the buyer and suppliers. The concept of squeezing the suppliers in order to gain a desired outcome can back fire the buyer in the long run. The concept of forcing the suppliers to reduce price is a win-lose relationship in the short term. It can also be a lose-lose relationship if the buyer still uses the same method over a long period of time with the same suppliers. This is because the buyer will lose its competitive edge due to the inferior product delivered by its suppliers and the supplier also will lose due to the decreasing profit margin. In delivering goods or services, each parties involved must learn to negotiate with a win-win attitude.
By instilling this positive behaviour, the trust between the supplier's networks will grow and therefore the relationship will mature to a strategic partnership. The win-win thinking does not just focus on quality and cost alone, but also to future collaboration. A win-win relationship also fosters good working environment for both parties as both will benefit in the process.
At the initial stage of any relationship, there tend to be a relationship that has minimal or no trust at all. Vital information such as finance information is kept within the companies and is not shared among its partners. The circulation of information is very limited and therefore hampers the formation of a network among the suppliers. In order to create a successful network of suppliers, the vital information such as financial data and product data must be on an open based communication.
Open communication instil trust amongst the suppliers and therefore creates the tendency of suppliers more added value than it is required. By opening up communication also allows problems to be noticed as quickly as possible and countermeasures can be taken immediately. Other advantage of open communication is that innovation and creative ideas can be brought more easily into the supply chain by both sides of the parties involved.
How supply chain management benefits and how it will help your business productivities? Talk to Alenu IT Solutions today!By instilling this positive behaviour, the trust between the supplier's networks will grow and therefore the relationship will mature to a strategic partnership. The win-win thinking does not just focus on quality and cost alone, but also to future collaboration. A win-win relationship also fosters good working environment for both parties as both will benefit in the process.
At the initial stage of any relationship, there tend to be a relationship that has minimal or no trust at all. Vital information such as finance information is kept within the companies and is not shared among its partners. The circulation of information is very limited and therefore hampers the formation of a network among the suppliers. In order to create a successful network of suppliers, the vital information such as financial data and product data must be on an open based communication.
Open communication instil trust amongst the suppliers and therefore creates the tendency of suppliers more added value than it is required. By opening up communication also allows problems to be noticed as quickly as possible and countermeasures can be taken immediately. Other advantage of open communication is that innovation and creative ideas can be brought more easily into the supply chain by both sides of the parties involved.
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