Today, businesses need to ensure their products are sustainable, ethical, and responsibly sourced. This is on top of other needs such as improving supply chain resilience, assuring product quality and safety, and proactively mitigating risks. To meet these demands, we have seen a push in the past decade for increased supply chain transparency – knowing who your suppliers are and where your products and materials come from.
But beyond supply chain transparency, supplier collaboration plays a huge role in ensuring supply chain integrity and enabling greater communication and visibility. Collaboration between a buyer and supplier creates a strategic partnership that ultimately helps both parties achieve business objectives and meet new supply chain expectations.
Transactional relationships
Traditionally, relationships between buyers and suppliers are transactional, meaning they are based solely on the transaction between the two parties: what is the supplier providing the buyer, at what cost, and for what length of time. The relationship begins and ends there.
While there is nothing inherently wrong with transactional relationships, they are relatively short-sighted and do not encourage the innovative mindset often required by ambitious sustainability and responsible sourcing initiatives. Transaction relationships can also be somewhat “adversarial” because they put the buyer and supplier are at odds: the buyer wants to get the most value at the lowest possible cost, while the supplier wants to provide the “least” value at the highest possible cost. There is a constant tension between buyer and supplier and what they are each trying to achieve.
Today, buyer/supplier relationships tend to be more transactional, but the case for more collaborative partnerships is becoming clear.
Supplier collaboration needed for better supply chains
To achieve more sustainable and responsible supply chains, businesses should establish collaborative relationships with their supply chain partners. Far-reaching supply chain commitments such as 100% responsibly sourced commodities or carbon neutrality typically require upending long-standing processes. Supplier collaboration is critical to make such sweeping changes.
By working together to meet a shared commitment, suppliers and buyers can achieve more ambitious goals that often require longer-term cooperation. According to BSR, collaboration is a necessity to improve supply chains. Companies that want to “drive sustainability outcomes through their supply chains must engage their suppliers in the process.” In other words, more sustainable and responsible supply chains depend on collaboration.
Suppliers have much to gain from collaboration as well. First, the willingness to work together with a customer towards a broader goal reflects positively on a supplier. Suppliers that “commit to CSR demonstrate their ability to take on a long-term vision,” an appealing trait for forward-thinking companies with ambitious goals.
Collaboration also puts buyers and suppliers on a more level playing field—both parties are invested in the result and no longer have strongly competing interests. Collaboration takes into account both buyer and supplier needs, with the goal being to find a solution that works for everyone.
Moving from transaction to collaboration
There is evidence that the industry is moving towards greater collaboration. According to research by the Global Fashion Agenda, 73% of apparel sourcing executives anticipate “an acceleration of companies entering closer partnerships with suppliers and reducing transactional supplier relationships.” Supply chain programs are taking on new and larger scopes, leading to more collaboration between buyers and their suppliers at all tiers. Corporate commitments and supply chain programs are “evolving beyond regulatory compliance to focus on creating shared value with stakeholders.”
As collaboration becomes the norm, financial investments by both buyers and their suppliers may become more common. According to a McKinsey survey of the fashion industry, “61%…think it is highly or somewhat likely that by 2025, the norm will be for fashion brands to co-invest with suppliers in sustainability improvements.” While it remains to be seen whether co-investments will become popular, to what extent, and in what industries, companies are most certainly beginning to embrace collaboration.
Increasing supply chain collaboration
As a technology company, we believe in the role of technology in increasing supply chain collaboration. However, we recognize that technology by itself cannot build collaborative relationships between supply chain partners. Rather, collaboration requires live interaction between stakeholders in the form of phone calls, video calls, and regular meetings to set objectives and assess progress. It is about companies working together, viewing each other as partners, and maintaining communication to ensure progress towards a common goal.
Transparency-One plays a critical role in fostering collaboration between partners. Transparency-One’s B-to-B “social network” model provides buyers and suppliers with a single collaborative platform to upload, request, input, and track important supply chain data. Our shared platform encourages two-way communication and ensures that all parties involved are working with the same information. Transparency-One makes it easy to find essential supply chain data, from supplier contact information to critical certificates, declarations, or documents. In this way, technology streamlines buyer/supplier interactions to foster a more collaborative environment.
With the right technology and the right mindset, buyers and suppliers can work together to meet ambitious goals and achieve more sustainable, responsible supply chains.
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