In some ways it is strange that the concept of suppliers’ associations has taken so long to develop. Originally they started in Japan, in the 1950’s and were developed as part of the concept of Kyorioki Kai, but it has taken some time for their use to become valued within the Western Word, although now that globalisation is ever increasing, more and more associations are being established to ensure that the supply chain is healthy and that any problems identified within the supply chain are quickly sorted out.
Sharing Best Practice
The fundamental benefit of any suppliers’ association is that it brings suppliers together not to beat them with a (metaphorical) stick, but rather to ensure that they are able to share best practice and use the meetings as a way of identifying and tackling any problems. The suppliers can grow aware of the operational needs of the organisation in a way in which is detailed and focussed on what matters to their customer. This helps engender a feeling of mutual trust and awareness that is simply not possible if the suppliers are all kept at arm’s length.
As suppliers become more aware of the needs that their customer has, the need for further training often develops, as the supplier starts to understand how his customer functions. The supplier can then look at training within his or her organisation to ensure that all those involved within the process of supply from his/her company can be trained to know exactly what is required and why things are required.
Although this sounds very basic, it is very important. If those who supply do so within a vacuum, without being aware of how things are used once they have been supplied, then there is less understanding or awareness of quality control. So through the process of working hand in hand with the customer, different suppliers can ensure that all quality issues are addressed ‘in house’ before items are actually shipped out.
Reduce Operating Costs
The customer is able to benefit from lower operating costs because through bringing together various suppliers, they are able to communicate directly with a number of suppliers instead of having to have individual meetings or individually communicate with different suppliers. This brings with it the benefit of saving time; the customer says something only once, instead of having to communicate the same thing many times.
Stabilise The Supply Chain
Through establishing supply chains it is really easy to create a stable supply chain. The suppliers all feel as if they are involved in the process, they feel that communication takes place on a 2-way basis and so they are keen to retain that kind of relationship. This means that the supply chain is stable in the sense that suppliers will stick with the customer, even during times when orders may not be steady. The importance of having a stable supply chain cannot be over emphasised; it is critical for the customer to feel secure, knowing that suppliers will stick with them and not bale out at the first problem that may occur.
Collaboration of this kind is rare, especially because in previous times the relationship between the supplier and customer was not an equal relationship with all power being vested in the hands of the customer. But now the emphasis is very much on making sure that the relationship is one that is of mutual benefit, creating a mutual interest in the continued nature of the relationship.
So there are a number of benefits to be had from a suppliers association, both for the supplier and the customer. Although they can initially be treated with some suspicion, the benefits do soon become apparent to all those involved.