At a conference this month, General Motors VP of Global Vehicle Engineering Mark Reuss stressed the importance of developing and maintaining good relationships with suppliers. According to an article on ReliablePlant.com,
GM recently has taken several steps to improve supplier relationships, including revising its supplier cost reduction suggestion program to let suppliers keep a larger share of savings generated from cost reduction ideas that are implemented. In addition, GM recently announced that later this year, it will begin paying direct material suppliers weekly instead of monthly. This move will allow suppliers to better manage their cash flow and reduce the need to borrow money to run their businesses.
When an organization has healthy communication with their suppliers, they are better able to tap into the suppliers' industry knowledge, and come up with new ideas for products, services, and ways things can be run more efficiently and cost-effectively. It is important to set up a collaborative two-way relationship that can deliver value to both parties.
Related to this, is the importance of establishing a way to measure supplier performance. (Curious about the distinction between supplier relationship management and supplier performance management? Check out my blog post from a few months ago on the subject.) Global supply chains are complex, inter-connected systems that must be managed by establishing key performance indicators, measuring the process, analyzing results and developing strategies to continuously improve performance.
Management Dynamics’ Performance Management solution integrates with our GTM solutions to access the wealth of operational data that is available in supply chain visibility and across key export, import and trade agreement processes which span from order to final delivery. Users across various functions can access Performance Management to run Web-reports or manage key metrics through scorecards.
