Because companies are more interconnected than ever, concern for one’s supplier and its suppliers as well is paramount, says Miguel Cossio, senior director at Gartner.
Ninety-four percent of companies Gartner speaks to say the importance of supplier collaboration increased, sometimes significantly, in the last 24 months, Cossio says.
He chalks that up to trade uncertainty. “The reality is supply chains have historically been focused on optimization, and right now it’s all about optionality. And to have optionality, you have to be able to collaborate with suppliers.”
In today’s fraught trade climate, companies are trying to get more attention from suppliers and greater access to scarce capacity. For many, that means endeavoring as best they can to become a customer of choice.
The best-in-class companies take a segmented, “very surgical” approach to supplier collaboration, Cossio says. Rather than treat all suppliers equally, they focus on the most important. They do that by creating shared road maps in terms of how they’re going to invest.
Why do so many companies get collaboration wrong? Cossio says the first big mistake is in the excuse, “Well, that’s just who we are. ” He says it’s not good enough to say one has a collaborative culture. “The reality is this is a capability that has to be always on, and therefore you need a strategy. You need a budget. You need roles and responsibilities to actually work on these collaborations.”
The second mistake is in paying lip service to the need to collaborate effectively. Executive reviews and supplier summits won’t drive collaboration, Cossio says. “Most of them don’t have trust from the suppliers. So thinking about what’s in it for the supplier, that’s how companies are winning that trust.”