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Why Relationships Matter Most in Effective Procurement


Outsourcing can deliver much more than just a lower-cost model, and it can create opportunities to harness added value through redefining the procurement approach.

There is a shift towards developing effective partnerships and transparency during the procurement process to achieve better outcomes for all.

So why do relationships matter most in order to achieve effective procurement?

1. Assessing Fit

It's important to make sure that both parties have goals and values that align with each other. When implemented correctly, supplier relationships can boost innovation capabilities, reliability, and quality. This relationship should be intended to produce results that would otherwise be unattainable.

Before committing to a partner, understand their methodology, culture, and the previous results that they've produced. Verify that this is a supplier you can envision yourself communicating with on a frequent basis in order to get the most out the process.

2. Relaying Expectations

As management practices focus more on a lean internal composition and the reliance on outsourced solutions, a mutual understanding between both parties has become essential in producing results. This involves a communicated effort to demonstrate the company's brand value, established culture, integrated practices, and partnership expectations.

3. Increasing Opportunity

Effective procurement can dramatically impact the time you save when balancing objectives and deadlines. By leveraging this type of supplier relationship, you could expedite certain processes that might otherwise prevent a product from being released to market. You will also be able to boost competitiveness, risk management efforts, and financial gains.

When researching the various relationship options available to you, first analyze your firm's supply chain and observe how each partner might be able to reduce costs and save time. List your goals and seek a partner that can cater to those needs.

4. Communicating Frequently

Having a strong relationship with your supplier allows for frequent communication regarding any potential questions, concerns, or ideas for the future. This communication is crucial for seeing high returns because it leaves room for creativity and brainstorming. Without this correspondence, both you and your supplier will be working primarily independently of each other, stripping away the potential for effective collaboration.

The availability of frequent communication can also ensure that the previously listed benefits of effective procurement remain in focus throughout the course of the relationship. Goals, culture, and brand can all change within any period of time. These changes should be communicated so that the collaboration process can adjust accordingly. It's also important for your firm to stay confident that the supplier is still equally engaged and committed to the process.

5. Committing to Change

Trust is essential to any effective procurement process because without an established level of confidence in the supplier's expertise, a firm is never going to be fully willing to commit any proposed changes to strategy, operations, or the supply chain process.

To promote trust, first ensure that the relevant supplier has been chosen through a rigorous process of defining criteria and matching a close fit. Then establish governance so that the supplier can operate effectively within the partnership. While you should always monitor performance and be watchful for a potential breach of contract, one should sensibly trust the supplier's expertise and move forward with assurance that the relationship is moving in the right direction.

The shift in culture towards outsourced opportunity has the potential to create a wide range of new products, services, and more effective ways of conducting business. With newly mitigated risks, shortened development cycle length, and increased brainstorming opportunity, the most effective leaders in the future will be bred by their understanding and implementation of these relationships. Understanding how to make these relationships work in your favor can pave the way for effective procurement within your company.

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