March 12, 2019 Written by John Heller

6 Methods for Effective Supplier Collaboration

The manufacturing world is entering a new era of rapid technological changes and innovation dubbed “Industry 4.0.” As organizations navigate new technologies and opportunities, innovation has become more important than ever before. Over the course of this blog series, we’ve discussed how closer relationships and more open collaboration with suppliers leads to innovation. From my experience and talking with other experts in supplier collaboration, there are six good places to start in order to simplify and streamline collaboration.

1. Look internally first.

Successful supplier collaboration depends on the OEM’s ability to coordinate design, execution, and evaluation of strategic long-term and short-term processes – and it begins internally. OEMs must hone their internal processes, tools, and methodologies before they can successfully collaborate with suppliers. Without clear and streamlined communication between departments, both OEMs and suppliers may rush to finish designs, leaving them with little time to optimize, innovate, and maintain quality control.

2. Be adaptable and agile.

According to the 2016 “Future of Manufacturing” report from IndustryWeek, an agile supply chain proves to be a dominant competitive advantage for manufacturers. Both OEMs and suppliers need to quickly accommodate changes to product needs and requirements. Considering how rapidly technology has evolved in recent years, existing knowledge and requirements can quickly be rendered obsolete. Suppliers and manufacturers maintain competitive advantage when they can iterate and finalize product designs quickly and optimally.

3. Identify suppliers with complementary competencies.

When identifying new suppliers to collaborate with, it’s important to understand how a supplier’s knowledge base complements the manufacturer’s. Companies need to find a perfect balance between their differences and similarities. If the competencies are too similar, the OEM and the supplier won’t have enough bandwidth for innovative approaches. On the other side, if the competencies are too different then neither company will be able to leverage the others’ expertise. In both cases, the partnership won’t be successful in bringing a competitive solution to market. But, when suppliers and OEMs can fill each others’ gaps, each entity can bring new ideas and innovations to market.

4. Implement valuable collaboration tools.

To ensure effective supplier collaboration, both manufacturers and suppliers need to closely understand the other’s component-specific designs and data. Identifying collaboration technologies that simplify communication and collaboration makes it easier to share information – without giving away trade secrets. In a perfect world, manufacturers and suppliers can share product information while controlling how much visibility the other entity has into their internal processes and intellectual property.

5. Provide high quality data and become a Model-Based Enterprise.

Some manufacturers are adopting the concept of becoming a Model-Based Enterprise (MBE), which means that their collaborative design and engineering environment is based on 3D product definitions – not traditional 2D drawings. Becoming an MBE gives organizations the ability to share data and product details more easily and efficiently across the enterprise, with better visibility, faster updates, and seamless consumption of data in various contexts. Check out Nathan Hartman’s blogs about Model-Based Enterprise to learn more.

6. Invest in an open culture.

Ultimately, perhaps the biggest factor in driving successful supplier collaboration is not about technology or processes – it’s about organizational culture. Manufacturers need to take a more expansive view of what their supplier relationships really mean and what value they can create with their suppliers. Together, suppliers and manufacturers can build a culture of openness and more transparent communication.

The Future of Supplier Collaboration

A better future for supplier collaboration is possible and is already happening at organizations of all kinds – but it’s not just a matter of investing in new technologies and systems, it’s about leaders within the enterprise deciding to guide their culture in a more open direction. By drawing upon the best ideas, tapping into the collective brain power of suppliers, and sharing ideas more openly and generously with suppliers, OEMs can create a more fertile environment for innovation.

About John Heller

John has extensive experience in mechanical engineering, supplier collaboration, cross-functional relationship-building, and procurement activities. Through this experience, he learned optimal ways to bridge the gap between engineering, procurement, and the supply chain. He has championed new product roadmaps, spearheaded procurement strategies, and worked with customers to understand truly valuable opportunities for product improvement. As Product Marketer for Vertex Software, John leverages his extensive background in engineering and product lifecycle to best understand and communicate pain points and opportunities in manufacturing organizations.