StRM results in mutual benefits for buyers & suppliers
A closer, more strategic approach to managing key suppliers can deliver substantial benefits for organisations willing to invest the time and resources, according to procurement advisors Efficio.
In a recent t Viewpoint article Efficio conclude that Strategic Relationship Management (StrRM), is a more advanced form of Supplier Relationship Management (SRM) which has been widely accepted as mutually beneficial for buyers and suppliers.
Efficio Principal Julian Catchick says: “SRM has caught on because it is good business. But within the SRM mould there are opportunities for a more advanced approach offering much bigger benefits. We call this Strategic Relationship Management.”
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Typical features of StrRM include both parties being well informed about one another’s business, an effective escalation process to enable efficient and effective communication of major issues up to management level, fast, flexible communication to resolve issues on either side and regular meetings to identify opportunities to streamline processes.
According to Catchick, Strategic Relationship Management is most appropriate with suppliers of high-cost goods and services which have a high impact on a business, as opposed to lower-price, lower-impact items.
Implementation of StRM involves commitment from both parties, first-class planning, supplier performance data management and market intelligence, Catchick says. Crucially, it requires effective networking at executive level to nurture existing suppliers and identify new sourcing opportunities.
However, the benefits of StrRM are substantial. It typically results in clear action plans agreed by both sides, including expenditure with a given supplier, recent performance information across the entire organisation and market intelligence on the supplier’s sector.
Holding collaboration workshops may lead to getting more service or product customisation out of an existing agreement without a change in total cost, where the purchasing organisation and supplier work together to design, develop, test and roll out a bespoke product or service. This can produce a competitive advantage for the purchasing organisation.
Catchick concludes: “Successful implementation of StrRM requires considerable commitment of management time and resources if it is to be successful.
“If managed and resourced properly, however, it can bring substantial rewards, delivering value far beyond those envisaged in the original buyer/supplier contract.
“The insights it produces can feed into future sourcing strategies, new products and the harnessing of innovative thinking among key suppliers.”
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”