Dean, GBC, 3 min read
Improving suppliers’ performance of value chain activities can also remedy your company disadvantages concerning costs and customer value. On the cost side of things, your company can gain savings in the suppliers’ part of the overall value chain by pressuring those suppliers for lower prices, switching to lower-priced substitute inputs and collaborating closely with suppliers to identify mutual cost-saving opportunities. For example, just-in-time deliveries from suppliers can lower your company’s inventory and internal logistics costs and may also allow suppliers to economise on their warehousing, shipping, and production scheduling costs-a win-win outcome for both. In a few instances, companies may find that it is cheaper to integrate backward into the business of high-cost suppliers and make the items in-house instead of buying it from outsiders.
Similarly, a company can enhance its customer value proposition by working with or through its suppliers to do so. Some methods include selecting and retaining suppliers who meet higher quality standard, coordinating with suppliers to enhance design or other features desired by customers, providing incentives to encourage suppliers to meet higher quality standards, and assisting suppliers in their efforts to improve. Fewer defects in parts from suppliers not only improve quality and enhance differentiation throughout the value chain system but can lower costs as well as since there is less waste and disruption to the production processes.
Does your strategic planning software give you this kung-fu in business. If not, time to change 🙂
Much love ❤️ from the GBC team and the Yoda of small business planning.