While cost-release has been the focus for efficiency and improvement in recent years, few organisations effectively translate commercial needs into operational capability to grow their business. This means that savings identified within the supply chain often evaporate through poorly executed customer management within relationship based selling, giving away hard fought rewards.
These problems frequently occur at the level of ‘Co-existence’ or shallow dependence, where relationships exist at a transactional level, with little knowledge or understanding of each other. The focus is usually product driven – to meet a supplier’s basic need.
To move beyond this you need to develop a relationship with your customer which deepens trust and takes a longer term view, enabling you to unlock mutual volume and value.
However, before doing so, you need to know whether it’s worth the investment. Decisions must be based on your knowledge, insight and understanding of the customer and market
- Do you understand their potential?
- Is there sufficient margin for added value within the value chain?
- Will working together deliver enhanced value to the relationship?
If the answers to the above are yes, it is time to move the relationship towards Shallow Interdependence.
This type of relationship focuses on reliability and competence when working together; it tacitly implies a long-term approach. It is where you work with the customer to develop trust around sensitive information areas, explore opportunities for joint developments which can cement the relationship. These advances are evidenced through mutually agreed processes such as confidentiality and joint service agreements to ensure the equitability to both parties.
A secure foundation provides a base to work together, to reduce risks and explore mutual benefits. This includes co-creating joint solutions around value creation, knowledge sharing, technology links and joint planning.
Relationships that are built on trust have lower transactional costs, as the need for monitoring processes and systems are reduced. Collaborative working is more efficient than going solo, while opportunities for co-creation are not only more efficient but mitigate risks.