Winners are grinners: 3 ingredients for win-win supplier relationships

Ensure you and your suppliers are grinning throughout the life of your contract with these three ingredients to establish and maintain a win-win relationship.

The culture of your contract will have been established early in the sourcing process. During the tender period, documentation and interactions with suppliers will have set the tone for the ongoing relationship during the contract management phase.

There are four types of relationships that a contract will typically fall into:

  1. Adversarial: Each party has clearly established responsibilities and the supplier is monitored and inspected – little or no trust is required. This model is most likely to experience disputes that result in litigation and cost overruns by both sides.
  2. Cooperative: Each party knows and commits to the goals of the contract, which requires a degree of trust. Energy is invested in communication and ‘win-win’ conflict resolution. Tasks are often completed within budget and on schedule.
  3. Value add: One integrated team set up for the life of the contract, with joint accountability for contract delivery requiring a high degree of trust. Both parties have senior sponsors who will remove barriers and provide support for contract objectives.
  4. Synergistic: A strategic partnership where the essence of the relationship is to increase the profitability of both parties by creating synergistic solutions. This requires extensive trust, communication, collaboration and organisational commitment and sponsorship from both parties.

Regardless of the type of relationship your contract falls into, there are three key ingredients to establish and maintain a relationship that will keep you and your suppliers smiling throughout the life of the contract.

1. Trust

Trust is the cornerstone of any great relationship, but it shouldn’t be extended from day one. Initially any trust will be based on people’s perception of the other party’s reputation. Over time, trust will be built by both parties delivering on commitments. As the Contract Manager, you can support this process by working with your supplier to define shared goals and how you plan to achieve them early in the process.

2. Respect

It’s equally important to imbue the relationship with mutual respect. Setting the ground rules for interaction up front will make sure that everything stays respectful, even if things aren’t going well. Your kick-off meeting is an ideal time to work with your supplier to create an agreed framework of acceptable behaviours and values for your contract.

3. Connect

Scheduling relationship building opportunities between the two teams will facilitate a cooperative culture. It’s a good idea to continue formal and informal social events, briefing sessions and information sharing events throughout the life of the contract to make sure everyone is committed to keep the communication lines open and the teams interacting.

In summary…

  • The culture of your contract will have been established early in the sourcing process.
  • Relationships will typically be adversarial, cooperative, value add or synergistic.
  • Trust is important and is built over time. Both parties will need to work at delivering on commitments.
  • Set ground rules for behaviours and mutual respect up front.
  • Everyone should participate in relationship building opportunities.
2017 Procurement Study

Carrot or Stick?

Keys to boosting supplier performance revealed

Our 2017 research study highlights clearly a number of practical insights that will help your organisation drive much stronger performance from your suppliers.

The report hightlights:

  • What performance buyers typically get from their suppliers
  • What suppliers recommend buyers should do to improve the suppliers performance
  • What interventions actually work to lead suppliers to better performance
  • Differences between managing contracts in the public and private sector
  • Three things you can do today to improve supplier performance