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5 Benefits of Strong Relationships in Strategic Sourcing

July 30, 2020

Happy International Day of Friendship! As a holiday officially recognized by the United Nations, the idea of a World Friendship Day was first proposed in 1958  by Dr. Ramon Artemio Bracho during a dinner with friends in Paraguay. Out of this meeting of friends, the World Friendship Crusade was born. World Friendship Crusade is a foundation that promotes friendship and fellowship among all human beings, regardless of race, color, or religion. Since then, July 30th has been faithfully observed yearly as Friendship Day, not only in Paraguay, but across  several other countries as well.

While thinking of this celebration, I was reminded of how we can promote and foster relationships between buyers and suppliers in strategic sourcing. As a crucial component to our global supply chain, beneficial relationships result in partnerships that generate benefits for both sides.

Below are 5 reasons why we should focus on growing partnerships between buyers and suppliers in strategic sourcing.

Build Supply Chain Resiliency

More resilient supply chains ensure drastically reduced impact during periods of substantial disruption. As global interruptions continue at a grander and grander scale, organizations should place a greater emphasis on building KPIs around the ability of their supply chain to maintain productivity during these times. As we’ve learned through COVID-19, sourcing professionals aren’t merely responsible for managing spend; we’re responsible for executing on the ability to react, respond, recover, and even thrive under any conditions or circumstances. Strong relationships with suppliers within your supply chain work much like they do outside of the workplace: a supplier’s willingness to prioritize your needs as a buying organization during tough times are a direct reflection of the partnerships you are able to forge during the good times. These relationships translate directly into improved supply chain resiliency.

Gain Transparency

There is no substitute for real-time collaboration. Cutting through ad-hoc phone calls, messy email chains, and texts stuck in your phone, to having a single space to collaborate enables at-a-glance insight into the status and progress on your strategic sourcing events. Imagine having a digital solution providing a supplier survey that maps out bonus/malice values for added delivery fees, discounts offered, and volume-based discounts alongside your RFP, allowing for you and the supplier to know where each stand. During a time of global disruption, we have learned transparency is crucial to sourcing success.

Drive Efficiency

When expectations are clear from the outset of the RFP there is no room for discrepancies. Being on the same page enables both parties to execute faster, end of story. Take a recent Arkestro customer, a manufacturing company that struggled with using traditional processes (i.e. spreadsheets, finding .When both the buyer and participating suppliers were empowered with sourcing enablement tools that clearly define all steps in the process and automated the execution of the negotiation, both sides were left satisfied with the business outcome and time saved by the removal of tedious tasks and headaches caused by guesswork.  Leveraging a sourcing enablement toolset resulted in significantly reduced cycle time, creating opportunity for a new supplier to win business in a much shorter time frame with complete visibility throughout.

Shared Vision and Values

Sourcing in 2020 presents a lot of challenges (biggest understatement ever!).Sustainability and environmental concerns, inclusion of minority, disadvantaged, and women-owned businesses, along with other social and ethical factors are all considerations strategic sourcing professionals are tasked with juggling on a day-to-day basis when deciding on which business partnerships to pursue. Diverse supplier partnerships drive competition, promote innovation, and meet the growing demand of increasingly better informed customers who are quick to recognize the impact of responsible sourcing.

Sharing in a common mission and value system, even in times of a global pandemic, will be critical to the success of buying organization moving forward. Being able to find suppliers that align with your business goals is a crucial component of maintaining the integrity of your organization . I read great examples of socially responsible sourcing  in the Advertising Speciality Institute. AT&T announced that it is currently on track to meet its commitment of spending $3 billion with U.S.-based black-owned suppliers by the end of this year. And Kaiser Permanente, a health care and insurance company, recently announced it will commit to spending $2 billion annually with woman- and minority-owned firms.

Another fantastic example of sharing visions and values is shown with our friends at UCB Procurement, where they believe in ‘responsible procurement’ where the best way to have a positive impact on society is by engaging with suppliers and integrating them into their supply chain requirements, specifications and criteria. Read more about their remarkable initiative.

While supplier diversity can feel like a  requirement or just a buzzword, strong supplier relationships ensure that your priorities outside of savings are front and center in the partnership, rather than an afterthought. Well-aligned suppliers yield confident execution of your company mission.

Deliver Better Value

Better relationships yield better results. 65% of procurement practitioners say procurement at their company is becoming more collaborative with suppliers, according to The Future of Procurement, Making Collaboration Pay Off, by Oxford Economics. Why is this the case? Collaboration and partnerships allow for businesses to meet market demands and disruptions with responsiveness, visibility, agility, and innovation (see Build Supply Chain Resiliency, above). Relying on suppliers as strategic partners rather than ‘Vendor X’ is a game-changer for the relationship, not just for the bottom line or cost savings. The materialization of a rewarding buyer-supplier relationship results in a supplier who is well-aligned with your success, rather than just their own.\

When I think of delivering value in 2020, my mind is immediately flooded with recollections of companies that have chosen to pivot to meet a huge demand and need for ventilators, hand sanitizer, and masks. Aligning with suppliers in these cases have demonstrated the flexibility and resilience of relationships as essential to supply chains.

“…supplier partnership: a commitment over an extended time to work together to the mutual benefit of both parties, sharing relevant information and the risks and rewards of the relationship. ”

The Institute for Supply Management‘s definition of supplier partnership: a commitment over an extended time to work together to the mutual benefit of both parties, sharing relevant information and the risks and rewards of the relationship. These relationships require a clear understanding of expectations, open communication and information exchange, mutual trust, and a common direction for the future.

When strategic sourcing teams use the Arkestro AI Platform, supplier partnerships strengthen and grow. Through mutual transparency and real-time collaboration, you signal the importance of supplier relationships to your sourcing team and plant a vital seed for the foundation of your partnership with strategic suppliers. With the messaging and tasks feature, increased transparency and collaboration grows. Acting as a centralized source of truth for all sourcing activities, buyers are able to communicate directly with suppliers, eliminating the need for back and forth emails and gray areas, consequently, blossoming into a mutually beneficial partnership.

To discover how you can cultivate your most successful partnerships, visit or request a demo today.