Building Supplier Relationships

Supplier relationship management (SRM) is about integrating the right technology, processes, resources, and tools needed to align your organization with your suppliers to create stronger and more loyal relationships. Having great relationships with your suppliers can save your company money. You might be able to take advantage of attractive deals, incentives, and discounts offered by happy and loyal vendors; great pricing can give you an edge over your competition. Plus, the more well run your relationships are, the less likely that you’ll have to spend money on the unexpected costs that come with delays and mistakes in production. 

For this discussion post assignment, read "Building Deep Supplier Relationships" by Liker & Choi (retreived from https://hbr.org/2004/12/building-deep-supplier-relationships) and consider the contrast between the supplier management approach of Toyota/Honda and the Big 3. Also read "Competition vs Collaboration" at https://academyofprocurement.com/competition-vs-collaboration/ and consider the benefits that collaboration can have for your company.

This week we covered the Development of Suppliers. Let's look at an example from McDonald's and an industrial practice example of supplier development that can be seen through the Product development by suppliers. As you read the examples below consider why were suppliers of McDonald willing to develop products for McDonald, often without any guarantee on partnership...and why were suppliers of McDonalds willing to share their technology and methodology with other suppliers of McDonald’s? For example:

• French fries: McDonald's developed a new way to prepare its French fries. In this new process the skin was peeled, they were then immediately dried in the air, slightly fried and then stored frozen. McDonald’s supplier invested $2.5 million to build a factory on this unproved idea from a laboratory.
• Frozen hamburger: Keystone was the supplier of McDonald's frozen hamburgers. In the old days, they supplied three times the required amount of fresh meat to restaurants. In 1967 Keystone, in an effort that led to finer meat texture by the ice, tested for 9 months' various frozen agents, frozen rate, temperature, ratio of meat and fat, and ways to mincemeat, and quick freezing preserve water. Keystone shared the technology with other McDonald suppliers, even though McDonalds was their sole customer.
• McNuggets: McDonald’s had a new product idea to get the meat from chicken. Keystone spend $13 million to build automated factories for chicken meat processing based on the successful pilot test before the formal approval. Keystone shared the technology with Tyson Food.

For your initial post in the discussion, address the following (and enumerate your responses in your post) : 

• Reflect on your company, a company you used to work for, or a company you are interested in working for, and discuss the supplier relationships. If you are reflecting on a company you are intested in working for, make sure to provide your references. Spefically discuss,
  1. Discuss the number of suppliers your company has and the types of relationships your company has with these suppliers.
  2. Were the supplier relationships considered long term relationships? What activites did your company engage in to develop and strengthen the relationships?
  3. Discuss the implications if the supplier also sells (a) independent products, (b) the same product to competing supply chain networks, (c) competing products, (d) substitute products, and (e) complementary products.