Operations Payoff

Rick's Blog - your source for news and insights into Operations and Supply Chain Management.

Partnerships Increase Business Value

Competent suppliers and competent staff are essential for increasing business value. The higher your staff and suppliers’ competency, the higher the value provided by partnerships. Your supply chain staff’s skills need to go beyond those of buyers to those of supplier business managers. Those duties include analyzing materials and services as they relate to the design of your products and services to optimize quality, cost and lead-time. The more competent your suppliers are, the more they will be able to participate in planning and design to help optimize those things as well.

Business value curveOne of my clients has been implementing a partnership program with several key suppliers and just announced a 12% increase in their stock price over the last quarter. A good portion of that came as a result of the increased margins, service levels and cash flow that came from the partnerships. My client has spent about a year changing the focus of their supply chain team and building supplier partnerships. As a result, their performance has risen to world-class and the value of the business has increased dramatically. That’s a huge ROI on a short-term investment.

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