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Blog: Building lasting relationships with suppliers

Ongoing supply chain issues have tested automotive suppliers and manufacturers over the last few years, exposing weaknesses in everything from resourcing to working relationships.

When response times, supply chain stability, and winning production and stock allocation is key, being on good terms with a supplier can really make the difference.

But how do you take your manufacturer-supplier relationship to the next level, especially in a trading environment like we have in 2022?

Here are five things you can do now to get the ball rolling.

1. Maintain regular touchpoints

In times of crisis, communication goes one of two ways; either it increases, and trading relationships become stronger, or it reduces and they suffer, sometimes to the point of disrepair.

Think about peak pandemic when factories were closing, and production was stalling; how did you communicate with your suppliers? Were they top of your list of priorities, or an afterthought amidst the chaos?

Establishing better lines of communication and sticking to the habit of regularly sharing goals, policies, priorities, challenges, opportunities, and threats will foster mutual respect and understanding, and open up benefits for both parties.

General Motors, for example, gained points for accessibility in the most recent Plante Moran annual North American Automotive OEM–Supplier Working Relations Index Study, ranking number one overall in timely communication with suppliers. It’s thought it was the introduction of virtual meetings, and moving from monthly to weekly touchpoints, that made that all-important difference this year.

2. Collaborate on something

As the automotive industry continues to evolve at pace there are more and more opportunities to share knowledge, experiences, risks, and rewards.

Particularly around electronic vehicles when technology is moving fast and competitive advantages are being sought by everyone.

Is there a challenge that you and a supplier could solve together, knowledge that could be shared or tested in a mutual environment, or a project that you could run collaboratively?

This means full shared ownership and investment from beginning to end, win or lose. The research and development tax credit scheme can help offset costs if you’re undertaking R&D, even collaboratively.

To take it to the next level you could also consider joint business planning, where both parties’ objectives align for mutual benefit.

Strategic alignment and long-term business planning can become especially important when markets and economics are unstable, as long as the right preparation and due diligence have been done.

3. Look beyond the cash

Think about what data your supplier currently shares with you; do you think there’s more you could be learning?

The types of information account managers have access to could prove valuable for getting to know channels, customers, brands, and markets better, so why not ask them to share these insights with you?

While privacy obviously has to be maintained and competition law will dictate the limits here, there’s probably a lot more you can glean if you just ask the right questions.

Similarly, think about any expertise or insight they can share with you on a business-to-business level.

For example, if they’re ahead of you with their adoption of certain types of tech, can they tell you about their experience, provide recommendations, help with research and training?

Approach your suppliers like a business partner and see if that uncovers any hidden benefits.

4. Solve issues quicker

When trading environments get tough simple things like paying the bills on time can very easily slip. Unfortunately, every time this happens a little bit of faith in the relationship is lost.

The manufacturers that ranked most highly in the 2021 Plante Moran annual North American Automotive OEM–Supplier Working Relations Index Study all scored well on payment issue resolution, so make sure problems are dealt with timely and effectively to maintain that trust.

Try not to deliberately delay payments to suppliers either, especially amidst a crisis; they have cashflow to think about too, and they’ll appreciate the stability.

5. Shout louder

All publicity ISN’T good publicity, but good publicity IS invaluable.

If you have a company blog, YouTube account, social media channels, newsletter, events etc, feature your suppliers’ achievements, too.

This is still a ‘you scratch my back, I’ll scratch yours’ economy, and word of mouth marketing is incredibly powerful.

You don’t have to give away thousands of pounds worth of advertising, you just have to consider the role your suppliers play in your success and highlight it accordingly.

It’ll show market awareness, build goodwill, and actively showcase to other suppliers why they should work with you more closely.

 

As we move into the next industrial revolution it’ll be those companies who build and foster mutually beneficial and authentic relationships with their suppliers and customers who stay resilient, and who ultimately succeed.

For advice on R&D collaboration, strategic planning and cashflow resilience, get in touch