Negotiating & Managing Key Supplier Relationships

Our study findings indicate that procurement and supply management executives believe tremendous value can be derived from implementing these practices for use with key suppliers.

Every practice was rated as “critical” or “very valuable” by at least 55% of respondents - and most practices received high value ratings from a significantly greater percentage, in some cases as high as 85%.

As described in the Introduction, our study participants report that, on average, they could realize savings that would add $43 million to their company’s bottom line by consistently implementing all twenty practices.

Based on these results, we expect that as leading companies complete initial cost reduction efforts (e.g., rationalizing supply base, consolidating purchases), they will further improve their supply management processes and find sustainable efficiency gains through the targeted use of partnering as part of a diversified approach toward managing supply relationships.

Diversified approach: Maximize value by choosing different solutions for different types of supplier relationships
Two seemingly opposite trends in supplier management are increasingly gaining traction in the marketplace.

According to a Institute of Supply Management survey of leading national purchasing and supply educators, “partnering” and “e-commerce” are currently viewed as the only two important tools or solutions (out of a list of 88 items) for supply-chain management and purchasing.

E-procurement and supply-chain management systems primarily offer companies reduced costs, and can also result in streamlined processes, increased visibility, and better forecasting.