Definition: a sole sourced supplier is the only supplier available in the market for that particular service or product.
One feature of many supply chains is the presence of a sole sourced supplier. These are the guys that have an IP - Intellectual property - or a niche in the industry. There are usually business agreements in place that reflect the importance of the relationship to both parties that cover confidentiality, service obligations, volumes, prices, technical processes, negotiation periods, packaging and so on and they have a longevity that can last many years. They are usually approved at an executive level of the organization and there can be many stakeholders involved. Sometimes these agreements can serve more than one factory where the company has a global presence, so the contract will cover local requirements.
At a tactical level the tasks are clear - understand the demand, ensure the correct price is on the purchase order, ensure on time delivery, raise corrective actions and follow up when there is a quality issue, work the regulatory side to ensure compliance with legislation.
At a business level #leadership then, what can be done to develop the relationship when it can feel like the supplier holds all the cards?
Price and change management is usually the trickiest bit. The sole source supplier wants value for their idea and their investment in equipment and cannot offer that product openly in the market place. They need a return and their return may be based upon volume over a period of time.
It can happen too that there is staff turnover on both sides so that some of the spirit of the parties at the outset has dissipated, and sometimes too relationships can go stale.
Best Practice #supplierrelationshipmanagement:
The best structure for all business relationships is a collaborative one
Keep growing the relationship - regular sit down meetings are important - even when there isn't an issue or a pressing matter.
Conflict resolution is a skill in itself and relationship growth efforts will keep this possibility at a low level.
Get to know the key stakeholders - there is staff turnover in every company - so be resilient on "passing on the baton". Raise staff turnover as a concern if it is becoming a challenge to the relationship.
We can lead on attitude and partnership values. If, for example, there is an account manager who is emboldened by the contract and is challenging to work with, we can find a way to refer to the spirit of the relationship. We've got to get our own attitude right first though.
Visit the supplier - meet the people - this relationship is pivotal - it's a sole source one - it's got to work and develop performance score cards - even simple ones.
Keep the supplier informed up front on any significant changes so that change can be managed on the front foot.
A strong mutually beneficial relationship will allow for some discussions between the lines of the contract.
Manage the legacy - patience, politeness, and being respectful to the terms while nurturing the spirit of partnership are key.
Thanks