In today’s competitive environment with so many uncertainties, whatever information available within a supply chain, if shared, will lead to efficiencies and enable all parties within the chain to gain margins.
The whole value chain should work together and the starting point of that collaboration is communication. The latest Better Buying Partnership IndexTM,which is being used as the purchasing practices metric on The Industry We Want’s dashboard, has shown us that we are not talking to each other. Or rather, that when we are, it is usually a dictation rather than a communication.
The report should be taken as a call to action to the industry. In order for the suppliers to see their customers as “True Partners”, they would like to be an equal partner in the relationship. Starting from the product development stage to future projections, suppliers want to be in the loop and have a say in the process.
In my daily business I come across different levels of partnerships with my customers. I will share 2 examples that have enabled us to save cost and gain margin equally by the brand and the factory.
One example was a European brand, selling via multi distribution channels with the support of social media and influencers. The brand was single product and wanted to develop and offer a complementary new product category to their existing range. Instead of trying to design and develop on their end, they collaborated with a factory that was an expert in that area. This way, they were able to find the best option in terms of innovation, efficiency and integrity and as a result found the optimum cost for their end consumer, where everyone in the chain was achieving their necessary margin for a healthy and sustainable relationship.
Another example of open communication was from an American brand, which shared 6 months rolling projections with their suppliers for proper capacity planning and pre-booking of raw materials. This open communication made the suppliers part of the team and helped get rid of idle capacity and last minute material booking. With fluctuating raw material prices, the earlier materials can be purchased, the better the margin that will be achieved.
Open, two-sided communication is the key to success in every relationship. When brands have been requesting transparency from their suppliers, best practices show us that the brand being transparent as well leads to stronger bonds and a healthier power balance within the chain.
I call on brands and suppliers, as well as foundations and organizations within the The Industry We Want to commit to transparency, and openly share their best practices with one other. And for brands and retailers to publish their Better Buying Partnership IndexTM scores and company reports.
A supply chain is as strong as its weakest link. Let’s get stronger together.