Strategic customer/supplier relationships

Reducing customer costs while increasing supplier margin

In true strategic partnerships the supplier tends to gain measuredly increased share, margin and longevity of relationship whilst the customer increases margin, reduces cost and gains access to the supplier’s capabilities, amongst other benefits
In these relationships are characterised by changes in the role and authority of the Account Manager; the nature of the relationship itself; the move away from selling and price; the increased number of contacts and breadth of discussions; and the increased focus on the value chain, especially the customer’s own customers. 

Moving towards the strategic partnership model demands some major changes in the usual approach and way of operating, and the senior management team must be aware of these demands before embarking on it. The nature of this stage of the relationship creates different expectations, involving:

• establishment of intent and mutual objectives
• research and analysis
• identification and agreement on mutual opportunities for gain
• negotiation of the collaborative operational framework
• creation of the joint plan
• joint action, measurement and reporting, review and changes.

In this paper Richard Ilsley explores the nature of these closer, more demanding and more rewarding, partnerships.