The Link Between Supplier Collaboration & Customer Satisfaction

Whether you’re talking about collaboration on the supplier side or customer side, its importance is nothing new. Modern manufacturers have long measured themselves by how closely they can promote integration and alignment across their suppliers, as well as by how effectively they can do the same with their customers. The benefits speak for themselves. Successful collaboration on the supplier side can mean lower costs, higher quality, and increased supply chain resilience. On the customer side, it can translate into a better understanding of their needs, faster delivery cycles, and increased revenue.

But while supplier and customer collaboration are both widely considered essential, they have not traditionally been seen as interrelated. Both exist in their own separate domains, the thinking goes, where they’re affected by different sets of challenges and require entirely different solutions. In fact, a closer look at what is really required for successful collaborations across both suppliers and customers reveals a lot more similarities than most organizations realize. Recognizing this interconnectedness, then using the right tools to increase collaboration across the business, is a critical way of reaping the full benefits of both domains.

In this article, we’ll explore what supplier and customer collaboration both require, then look at the capabilities you need to bridge their divide and address both their needs at once.

Understanding Supplier Collaboration

Everyone agrees supplier collaboration is a must-have these days, and there is certainly enough evidence to back it up. In one McKinsey survey, for example, companies that regularly collaborated with suppliers “demonstrated higher growth, lower operating costs, and greater profitability than their industry peers.” But the world of suppliers is a large one, with many potential ways to collaborate — so what are we really talking about when we talk about supplier collaboration?

Most simply, we’d define supplier collaboration as the process of working strategically with suppliers in order to integrate them into your workflows, align them with your business objectives, and enhance supply chain performance. More specifically, as we’ve written before, supplier collaboration can refer to “the process of aligning contract, outsourced, and component manufacturers with R&D, Procurement, and others to deliver on key goals and drive innovation.” In any case, the goal is to create efficiencies on both sides — the supplier and the company — in order to drive value and increase performance everywhere.

At least, that’s the aim. In reality, there can often be a variety of challenges that stand in the way. Here are a few common ones:

• Information silos: Technical data is often housed and managed in PDM and PLM systems. While this may be straightforward enough for engineers and other specialists to access, suppliers may not have the means to view this information. This effectively creates silos of critical information, making it difficult if not impossible to share technical product data with the rest of the supply chain.

• Outdated technology: It’s not uncommon for there to be large disparities between the tools engineers use to view and edit data and the ones their suppliers rely on. In fact, most downstream organizations lack the technology and even skills to open data in its native format. Instead, they may resort to outdated file sharing and communication tools. This can break the digital thread, making decision-making harder, production slower, and unforeseen costs and delays more likely.

• Cultural barriers: Both manufacturers and suppliers often have deeply ingrained cultures and structures for sharing information, collaborating on products, and progressing through projects. As a result, when faced with the need to change or otherwise adapt these processes in order to work more closely together, they may resist. Overcoming these barriers and emphasizing collaboration over standardized routines can be a necessary challenge to overcome.

Despite all these challenges, pursuing supplier collaboration should still be considered an essential task for modern companies. For one, effective collaboration with suppliers makes it much easier for businesses to access and take advantage of their suppliers’ expertise. This could give them unique insights into processes or materials, leading to improved or more cost-effective products. Likewise, a closer relationship with suppliers can help reduce errors by making it easier to identify potential problems earlier, as well as come up with initiatives for streamlining processes and introducing product improvements elsewhere.

Close supplier collaboration can also help improve the timeliness of producing and delivering products. Greater visibility into the supply chain will allow businesses to more closely track materials and production schedules, as well as get ahead of possible bottlenecks. With their efforts and data aligned, business and suppliers can also position themselves to adapt to changing customer demands through more strategic inventory management and short lead times. The result will be a much more scalable operation overall.

And the benefits go on. However, the end result is a stronger, more effective, and more resilient business-supplier relationship.

The World of Customer Collaboration

Customer collaboration, as it’s commonly understood, occurs on the other end of the spectrum. It involves creating a strategic partnership with customers so that they can more closely engage with the creation process. This may include actively including them in product development, soliciting their feedback on prototypes or designs, or getting their input on specific product or service challenges. In short, it is a multifaceted way of listening to and working with customers in order to reveal issues early and avoid the high cost of late-stage design changes.

The significance of close customer collaboration has long been recognized by companies — a big reason why you may get so many requests for feedback or reviews after making a purchase. Treating customers not just as consumers but as co-creators can not only help produce more relevant and popular products, but also dramatically improve customer loyalty and engagement long-term. 

Of course, similar to supplier collaboration, working closely with customers can also come with its own set of challenges. Here are some of the most common:

• Real-time communication: By far, collecting customer feedback in the form of product design reviews is the most frequent form of collaboration. But while it may require less effort to solicit this feedback through email or phone calls, the most valuable form of feedback often happens in real-time. Unfortunately, this kind of communication is also the most difficult to keep track of, which means it can lead to errors. Without some form of real-time, traceable collaboration instead, these can mean unforeseen costs and delays.

• Data access: Effective customer collaboration can also be stymied when everyone lacks access to the context of the data they’re discussing. For instance, some customers may only be able to view data for a specific product feature, while others may be looking at out-of-date design information. This will lead to miscommunication and mistakes. Instead, for customer collaboration to actually be meaningful, everyone needs to be able to view always-up-to-date product data in the same place they are discussing it.

• Managing expectations: Involving customers more closely with product development may also give them unrealistic expectations about the business’s capabilities. This may include expectations around product features, delivery timelines, or the level of support they’ll get. Making sure these customers don’t end up frustrated or dissatisfied will require careful management.

• Technology constraints: Collaborating closely with customers is rarely as easy as simply picking up the phone. Instead, it will require giving them access to always up-to-date product data, the ability to view that data within the proper context, and the capability to communicate ideas quickly and in real-time. In other words, it will require modern collaboration tools. If a company lacks this infrastructure or has outdated IT resources, their collaboration efforts may suffer.

All this said, customer collaboration has become a standard aspect of companies across industries for a simple reason: it mitigates the risk of late-stage changes. Specifically, by enabling customers to engage more with companies and their products, it makes it easier to directly address their needs, meet their delivery targets, and generate more revenue. Seeing their feedback directly reflected in the product can also make customers feel more valued and appreciated, which will encourage greater loyalty. And by communicating more frequently and openly with their customer base, companies can help build transparency and trust, and ensure greater customer satisfaction.

Bridging the Divide with Technology

Suppliers and customers may exist on different ends of the product lifecycle, but this doesn’t mean that collaborating with one or the other requires completely different tools. A quick look at the challenges both types of collaboration face should show just how much they have in common. This is why bridging the divide between them and building a more unified approach should start with technology that promotes easier collaboration for everyone.

Here are the essential capabilities companies should look for when focusing on a comprehensive collaborative plan:

• Real-time data sharing: Suppliers need access to the latest data to remain responsive and stay on top of production schedules, while customers want to immediately feel the impact of their input. When companies don’t require either to figure out different document formats or wade through complex file sharing apps, and instead allow them to access data the moment it is ready, a significant barrier to effective collaboration gets eliminated.

• Contextual collaboration: Getting information into the hands of those who need it is the first step. Making sure they are able to understand and use it is the next. When you can give feedback and exchange information inside the appropriate context, whether that means placing mark ups directly in design files or integrating chat services inside a solution, you can skip the costly and time-consuming process of explaining and instead cut right to collaborating.

• Integration and adoption: Both suppliers and customers will have their own particular file systems and formats they prefer. That’s why it’s so important to use a collaboration platform that can understand and sync with those systems. Whether this means pulling relevant data to ensure everything is up-to-date or repackaging information from multiple sources into a central workspace, universal integrations will help ease the path toward collaboration. And when that happens, more people will be more likely to use and adopt the platform where they can do their work.

• Data security: Few things will discourage effective collaboration faster than fears around data security. This makes it essential for there to be robust security measures in place that make sure sensitive information (such as IP and product data) stays where it’s intended and communication streams remain private. Governance policies should also be in place that make controlling data access easy. When there are no concerns around who can see what, collaboration can proceed effortlessly.

Conclusion

Supplier and customer collaboration both offer their own benefits. But when businesses start viewing them through a similar lens, the work of encouraging this collaboration can get a lot easier. Instead of building separate systems for supplies and customers, businesses should instead adopt an integrated strategy that addresses the shared challenges of both. And doing this will require technology solutions that come with the right set of capabilities for making collaboration second-nature across the product lifecycle.

Built to address the collaborative needs of suppliers, customers, and every stakeholder involved, Anark’s solutions will connect your teams to the product data and input they’re looking for, while also enabling them to collaborate in context and have the conversations they need to make decisions and develop products faster. Let’s start transforming the way you work and collaborate — with everyone. 

Request a demo today to see what Anark can do for you.

FAQs

Why should supplier and customer collaboration be seen as closely related?

Although they may exist at opposite ends of the product lifecycle, supplier and customer collaboration share many of the same challenges. This means that adopting a strategic solution that addresses both at once can be a much more efficient and streamlined way of ensuring collaboration throughout a business.

What are some shared challenges to achieving supplier and customer collaboration?

When it comes to collaboration on either the supply side or customer side, common challenges include communication barriers, data privacy and security concerns, accessing data and understanding it in its proper context, and providing enough technological support.

How can companies address collaboration across their product lifecycle?

They can do this by using a comprehensive collaborative platform like Anark that provides the right capabilities — such as real-time data sharing, contextual communication, robust adaptations and integrations, and strong data security — to make it easy for both suppliers and customers to align and integrate their processes.