Survey reveals manufacturers place a high value on supplier trust
Original Equipment Manufacturers (OEMs) place a high value on trust in partner relationships, according to a recent survey by ETM Manufacturing.
According to the study, manufacturers place a high value on trust in partner relationships and there is a great deal of consistency in the characteristics that define a "trusted" partnership, and in the behaviors that can tear down trust even in long-standing relationships.
The results illustrate that OEMs have a very clear understanding of the value of trust in the supply chain, and a very clear set of definitions for how suppliers can build - and damage - trust:
- 72 percent of those surveyed rank trust in supplier relationships as very important
- Nearly 3 of 4 respondents said that the most critical attribute in establishing trust was a supplier's commitment to establishing metrics and milestones of success at the outset of a project
- 88 percent said that the single most damaging thing a supplier can do to trust is fail to report when a scheduled milestone slips
Other factors for building trust cited in the survey include understanding the customers' business and proactive problem solving. Behaviors that damage trust include a failure to meet expectations or promises and making changes without advising the customer.
Rob Olney, president of ETM Manufacturing sees trust as critical in successful supply chain partnerships. Olney, working with customers such as computing giant EMC2 Corporation and start-ups like solar mounting system leader, Panel Claw and American Innovation Research Corp., has identified a step-by-step process for earning, nurturing and repairing trust with customers.
"One compelling lesson from the past few years has been that lowest-cost suppliers that don't keep their promises can be very expensive partners if rework costs and schedule delays effect customer satisfaction scores and market penetration," said Olney.
"In an economy where there's little or no margin for late delivery or poor quality, trust in your partner is no longer a nice to have - it's a critical factor in competitive advantage," he continued.
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.