Why do some supplier relationships fail? (aka Has this happened to you?)

We’ve all been there.  Spent months and months with a supplier talking about ‘win-win,’ ‘synergy’ and mutual strategic alignment.   Top executives on both sides talk about additional shareholder value being generated.   And then…months pass.  Not much has really changed.  In fact, there might even be an increasing level of disagreements between the two organizations.  It leaves you wondering – what happened?  Where do we go from here?

Many business relationships of course fail to deliver on expectations each year, so how can you avoid being another statistic?  There are some key issues that tend raise their head regardless of industry or deal type and despite all parties’ best intentions.

• Contracts don’t manage themselves.  You can have the most airtight well thought out contract executed, however it does little good lying the bottom of the legal departments desk drawer.  Don’t be surprised that if after many months (or a year) of neglect that when you pick up the contract again, the deal has gone off the rails.

• As the deal or project expands in scope, there is sure to be concern around who will pick up the additional cost and resources for the scope creep.  To compound matters, without clear decision making authority, ownership, and leadership on both sides, issues will continue to fester.

• Expectations on both sides must be carefully managed.  Everyone knows to “under promise and over deliver.”  That mantra applies with supplier relationships as well.  And in many cases, executives all have their own opinion of what a Supplier Relationship Manager is or should do.

Supplier relationship managers must manage expectations more craftily than Contract managers and Procurement/Sourcing managers.  As a relationship manager, one cannot simply cite regulation or policy as a reason to comply.  A Supplier Relationship Mangers must create a long-term vision of how the arrangement should benefit both sides.  Then it takes diplomacy, wile, and influence over multiple parties to motivate towards that vision.

These skills are quite different from typical Contract Management, Strategic Sourcing,  and Procurement.  There are not many best practices available as this is such a new discipline.  Source One's experts are well skilled in conducting market analyses and developing the best practices and next practices your department needs to gain a competitive advantage by implementing a proper Supplier Relationship Management (SRM) strategy. As unbiased consultants with more than two decades of experience, we have worked with tens of thousands of suppliers and fully understand what is important to them in a client supplier relationship. Our experts can work with your procurement team to pass on the knowledge and skills necessary to better your organization's supplier relationship management program. In addition to developing a supplier management strategy, Source One can serve as your Supplier Relationship Management team to identifying revenue drivers, ensuring organizational alignment, mitigating risk, reduce management costs, and developing supplier relationships that will create real value for your organization.