Supplier Associations are not a new concept in business, having originated in the 1950’s, first in Japan and then throughout the world. Now, as we increasingly live in a global village, with recession still affecting many economies, increasingly suppliers are joining together in a bid to stay competitive and to some extent, remain in business.
A Supplier’s Association is a group of suppliers who supply either a specific company or who service various companies who meet regularly in order to ensure that the needs of the company or companies are met. But in addition they seek to have improvement processes implemented almost continuously to ensure that the process of supplying the company/or their industry sector becomes as streamlined and as cost effective as possible.
The whole process relies on a spirit of collaboration between suppliers and in turn this is based on a mutual trust that needs to be established so that the suppliers will indeed work together.
Often the Association can be a representative body, so you may have a group of automatic door suppliers joining together to become one body with one voice.
Reducing Costs
Perhaps the single most effective reason for setting up a Supplier Association is to simply reduce costs. This is done by ensuring that all the systems and processes that suppliers use are error proof and that accurate data is shared with all suppliers. Suppliers can also be encouraged to streamline costs through sharing best practice and thereby ensuring that the production costs of supplies are minimised.
Sharper Working Practices
Some suppliers may be very good at production, but they may not be large enough to have the capacity to regularly review working practices and ensure that they become as efficient as possible. Through bringing together a large group of suppliers, and through their sharing of best practice, it is possible for suppliers to help each other learn sharper working practices from each other and thereby work more efficiently.
Communication
Communication is vital to the success of any business and this is where a Supplier Association can prove to be well worth the effort. This is because it enables a supplier and the client or customer to have direct and two-way communication.
Suppliers can also network and communicate between themselves at meetings and any potential problems can be ironed out and any changes to legislation or even perceived threats to the industry itself can be aired and discussed.
Drawbacks To A Supplier Association
Although there are undoubtedly some very good reasons to establish an Association of Suppliers there are some common problems associated with these organisations, which need to be explored.
The first potential problem relates to the wide variety of businesses all of whom may vary in size. Whilst it is good to have big businesses and little businesses working together, sometimes the little companies may feel that the larger ones dominate the Association and that even though this should be a forum where they can raise points and issues, they may feel that they still don’t actually have a voice.
There can also be an issue about trust. Some of the companies involved in a Supplier’s Association may well feel that some of the other companies cannot really be trusted and as such there is no real openness and sharing between companies. When this happens it is very difficult for the Association to actually operate effectively, since there is little information shared and little progress made when it comes to driving the particular industry forward and ensuring that it continuously innovates.
But overall Supplier Associations do work and they do help businesses survive in what can be turbulent economic times.
