05/07/2022 – Category: Trade
The procurement process is a huge, intertwined network of different actors, all of whom are involved in the value-added process and want to ensure that procurement runs smoothly. The same goes for this network as for any good marriage: It means standing together in good times and in bad times!
With a few basic rules, relationships in procurement, the relationship between procurement and suppliers, can be strengthened countercyclically and further expanded, especially in crisis situations.
Copy paper is a highly sought after commodity today as it has become scarce or depleted in offices across the country due to the lack of wood and import bottlenecks from corona or war countries. However, paper is still very important in the purchasing process, as the delivery notes – no matter how digitally the ordering process is set up – are still attached in paper form. If procurement and suppliers are in a long-term partnership, honest relationship between people, many procurement processes have survived a crisis unscathed. Especially in case of shortage, retailers like to reserve one or two batches of coveted products for their loyal regular buyers.
Strong buyer-supplier relationship: Loyalty pays off!
And especially in crises, retailers who only sell hot goods in reasonable quantities and continue to sell them at reasonable prices prove their worth. Buyers, on the other hand, who are only looking for cherry picking, ie. looking for the best value for money from each category of individual components and press suppliers in terms of price and conditions or in some cases literally squeezing them, should not be surprised if they find themselves in times of delivery bottlenecks no more items received . Even maverick buyers, that is, buyers outside of standardized purchasing processes, can be easily identified and disadvantaged in shortage situations. Using the example of the FFP2 masks, which was an urgent need in the first lockdown for employees in necessary ongoing productions, the benefits of long-lasting, good relationship of trust between buyers and suppliers quickly became clear: Suppliers sold FFP2 masks primarily to existing buyers . Loyalty pays off!
A unique selling point for the eProcurement platform’s simple system is its neutrality. It is an iron rule that the platform operator does not in any way interfere in the relationship between buyer and supplier. This includes in particular that simple system does not work as a reseller. Open and fair communication to all sides, based on good advice, recommendations and support, enormously strengthens the relationships between key suppliers and buyers.
The golden rules for strong collaboration
In addition to a fair platform for trading transactions, four basic rules should be followed that strengthen the cooperation between buyers and suppliers even in difficult times, so that challenges and risks can be overcome jointly:
- Trust, honesty and transparency: It is very important that both sides can be sure that the negotiated terms will be met. Fair, transparent pricing on the part of the supplier is as important as openness when it comes to strategic purchasing planning.
- High data quality and digital rules: The data quality of the supplied catalogs (electrical catalogs did not just reappear during the pandemic) must be correct, ie. the data provided must be reliable. Another impressive advantage of a digital platform is that the responsible purchasing department can create the catalogs on employee accounts in such a way that certain employees only have access to certain product ranges. Purchasing thus has the opportunity to manage its strategy purposefully, so that maverick purchases in themselves can also be excluded.
- Quick response: As soon as ambiguities or changes occur, they should be clarified by a quick exchange. Short response times are the essence of good buyer-supplier relationship.
- Human factor: The interpersonal level must never fall into the background. It’s all about human communication at eye level, based on appreciation and mutual respect.
Long-term supplier relationships – conclusion
Long-term strong buyer-supplier relationships are crucial to being resilient in crises, that is, being forward-looking and securely positioned. Because once the supply chains break, it’s too late to act! Rely early on good relationships and common foundations and platforms, on the basis of which you can be digitally strong together and continue to grow.
Read also: Crisis management in companies: “Suddenly decisions had to be made quickly”.
The author Josefina Hannappel has been a Senior eProcurement Consultant at simple system GmbH & Co. KG for 2.5 years. Thanks to her many years of business experience as a key accountant, she has known the market long and deeply – both the supplier side and the purchasing side.
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