Customer-Supplier partnerships are often sought after to improve the relationships between customers and suppliers. But is it really a partnership, or is it a label to be able to sell more to the customer? In this fireside chat Anoop Nathwani and I talk about an approach one could follow to really make a customer-supplier relationship into a partnership.

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Customer-Supplier partnerships – Video transcript:

Peter: Hello, Anoop, we’re back here again for our fireside chat.

Anoop: Hey, Peter Good morning to you How are you, when in fact, good afternoon to you good morning to me Yes,

Peter: And good, good day to our viewers at the moment, whatever timezone they are. When you and I talk about alliances and partnerships we mostly talk about those types of alliances where we create new value together, or the two partners that team up, create new value together. Now I recently had someone ask me about a partnership between a supplier and a customer, so customer supplier relationships, customer supplier partnerships and they even called it an alliance. I remember one of our first conversations in the podcast I used to have, when you worked still at Nokia, and you were just moved in Nokia from the Alliance department to the procurement department to work on precisely that. So how would you approach that and then what’s your take on customer supplier partnerships, and we’re careful with the word part if you’ve.

Anoop: Agreed. Agreed, but in light of everything that we’ve seen so far. I think the important thing here Peter is that the reason why I moved in Nokia is because the transactional relationships between customers and suppliers were pretty good. They’re on a good track there but what they need to do is, is make sure that they created much more value. Right. And the approach that I took and I would always take with you know if any of the listeners, etc. is the partner, put the partnership word, we have to do is start looking back and saying, what you’re trying to do is create new value between your customer and supplier, if, if what you’re trying to do between customer and supplier, particularly from a supplier from a customer perspective is to leverage a, a relationship you have with your supplier and say, I want a partnership with you but actually what you want is you want more long term supply and you want deeper costs you know better costs etc. I hate to say that’s, that is not a partnership that is just a more strategic supplier customer relationship in one way, shape or form. It is not a partnership, so I go back to and the way I did it did not here’s why I go back to some clear principles that if you, if you’re looking for a partnership, even between customers supplier, what you need to look at is, is this based on strategy. Right. So do you have a real key strategic drive to drive it. The second thing is, do you have some key principles and some very simple rules. I where you’re gonna look at shared risk shared reward, shared resources shared vision shared value. If you start to have those components, you can actually start to call it a partnership as opposed to a customer supplier relationship right now. Contrary to belief, you can have those partnerships between customers and suppliers within a value chain, you can have that but those principles around it being strategy driven and around the shared risk shared reward shared resources shared vision shared values. That has to be in place, otherwise you cannot call it a partnership, and specifically Peter, when you talk about innovation. Right I see a lot of organizations customers who say we want to innovate with our suppliers, but we want to, we want to source in the innovation. Right, so they will transact and that innovation, they will source that in. That is not a partnership, whereas a partnership is, let’s work with the supplier and co create the innovation together. Okay, based on the shared principles,

Peter: Okay, but now if we turn it around so suppose you are a supplier and you won’t have a partnership with your client. What might you do?

Anoop: So I think that the thing that I would do is, is you need to understand the customer strategic drivers, first of all, and you need to approach it from the point of view to say we’d like to work with you to address the strategic drivers and see how we could, we could work collaboratively together to meet those those drivers. And I think the person from the supply side needs to be what I would call a strategic business development person, as opposed to an account manager or account director present the challenges the account manager account director will still be driven by a quarterly figure or a monthly figure or whatever to say, I need to get a quarterly figure in to meet my targets. Right. On the other side, on the bias side. Right. They need that discretion. It’s, it’s very difficult for driven by procurement person who say they will have a have a number of targets and one of the targets will be I need to cut costs throughout the business, right, unless you have an evangelical procurement leader who says, I want to co create innovation, which you’ve got only got a few companies who do they normally do. So unless you’ve got that you’re in a different, different space. Okay. But the two sides need to come at it from a. How do we create new value so the thinking, and the competencies from both sides need to be around that. Right. Does that make sense Peter?

Peter: Makes sense. Absolutely. So it’s again, like with many things. It’s about co-creating value, and not looking at cost or other benefits it’s only one of the parties might benefit. And it’s about. Start with your strategy. Agreed. So I think

Anoop: Coming back to the point that the transactional piece, I call it a zero sum game. Right, and everyone says a zero sum game, whereas the CO creation piece is about the win win win. And that’s exactly what it needs to be. Excellent.

Peter: So then we are back with the win win win we addressed that once before in the fireside chat. I think it’s an excellent moment to finalize this one right and we’ll invite people to. To learn more, in our last pasta class.

Anoop: Absolutely coming up very soon Peter, in the next 10 days,

Peter: it is. Thank you very much.

Anoop: Thanks, Peter.