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Can Supplier Management Be Saved? Analysis and Technology Overview

When one hears the term “supplier collaboration,” a few companies come to mind – Honda or Johnson Controls are two such firms in the automotive industry that have set the standard for supplier collaboration. Many studies, books, and white papers have touted the benefits of strong supplier relations, which often include greater profitability for both partners, innovative product development ideas, cost reduction opportunities, and more.

The value derived from strong supplier relations reminds us of a case study from the classic negotiation book, Getting to Yes by Roger Fisher, William Ury, and Bruce Patton. Going back 20 years, I recall the case study involves dividing into teams with the objective of getting as much of an orange as possible (yes - we refer to the piece of fruit!). Though the book covers the topic of negotiation, it serves as the foundation for positive supplier relations.

When different teams sit opposite one another to negotiate the terms of how the orange will be divided, most teams conclude the only option involves cutting the orange in two. But as Fisher and Ury describe, through a series of open and honest communications, both parties end up learning they each actually want a different part of the orange – one the peel and the other the pulp.

And so the process of creating strong supplier relations (supplier management, supplier relationship management, or whatever term you prefer) rests on the ability of both parties to find ways to better understand how the other party sees the orange (so to speak).

This analysis and technology overview examines some of the key advantages and recent developments in the field of supplier relationship management. MetalMiner's Lisa Reisman looks at two specific examples from the automotive industry, and Spend Matters' Jason Busch and Thomas Kase take an in-depth look at some of the problems companies face when it comes to supplier management - and what they can do to address them.

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