How Ball and Roller Bearing Manufacturers Can Build Strategic Supplier Relationships

January 30, 2016 / , , , , , ,

As ball and roller bearing manufacturers continue to search for new ways to optimize their operations, many are starting to take a fresh look at their supply chain. Instead of simply treating their supplier relationships as a series of business transactions, they are treating them as a valuable part of their business strategy—and with good reason. According to a 2013 Global Supply Chain Survey from PwC, better supply chain efficiency has a measurable impact. In fact, the PwC report found that companies who consider supply chain a strategic asset achieve 70% higher performance.

Define the Relationship
Of course, there are many ways to strategically manage a supply chain. According to an eBook from the LENOX Institute of Technology, a good starting point is to clearly identify and define your current supplier relationships. Paul Ericksen, author of IndustryWeek’s “Next Generation Supply Chain” blog, suggests dividing supplier relationships into four categories:

Position the Relationship
According to Ericksen, managers need to make sure they categorize their suppliers carefully. While it might seem logical to throw suppliers of commodity products in the “basic” category, these types of suppliers can actually be strategic (“approved” or “key”) depending on how critical they are to your operation. “It is important to be highly disciplined such that suppliers are categorized solely based on the potential for negative financial impact that resourcing from them presents, not by the type of products they supply,” Ericksen says.

Once you have identified strategic suppliers, the next step is to position those relationships so that they bring value to your company. A white paper from the LENOX Institute of Technology offers a few best practices:

Make it a Win-Win Relationship
Like any relationship, it is important to remember that there are two parties involved. An article from Gallup stresses the benefit of intentional supplier engagement. “Companies must create a different set of conversations that aim to emotionally engage their suppliers and to become a “customer of choice,’” the article states. “Customers of choice gain unique benefits, such as access to the supplier’s best people, access to the resources required to serve account relationships, first access to the supplier’s latest technological advances, more favorable terms, shared risk taking, and priority allocation of resources or production capacity in times of scarcity. Being a supplier’s customer of choice creates a vital strategic advantage.”

Ball and roller bearing leader SKF, for example, engages its suppliers by awarding its top suppliers and then holding an annual SKF Supplier Day to recognize their contributions. As described here, suppliers are recognized based on nine categories.

In the end, the goal is to build a relationship that benefits both you and your suppliers. How can you create more of a win-win relationship with your supply chain?

To read more about the benefits of value-added supplier relationships, including some key areas where suppliers can help, download the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, or check out the white paper, Managing Your Blade Manufacturer Relationship.