Working in a partnership with your suppliers is a means to create new sources of value from within a contractual relationship to drive the most innovative outcomes possible. Achieving a partnership entails taking a strategic approach to identify the suppliers most likely to deliver your target outcomes, and initiating collaborative activities that are beneficial for both parties.
Referring to the diagram in the 'Managing Contracts' guidance previously, a partnership approach is distinct from continuous improvement activities as it seeks to create new, large enhancements to a set of strategic business outcomes - rather than small, evolutionary improvements to existing services or processes.
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Government defines a strategic partnership approach with suppliers as: "the practices and behaviours adopted to engage more collaboratively with strategic suppliers to improve delivery of government objectives and increase mutual value beyond that originally contracted". (Cabinet Office, Outsourcing Playbook)
Typically, the processes of adopting this strategic partnership approach are referred to as Supplier Relationship Management (SRM). SRM is defined as "a systematic approach for developing and managing partnerships. It is focused on joint growth and value creation with a limited number of key suppliers based on trust, open communication, empathy and a win-win orientation". (PwC Report, SRM)
The Government Commercial Function regards supplier relationship management as able to "create value beyond that originally contracted" (GCF, SSRM Guide 2019), through activities including:
◾️ Joint strategy development, objectives and planning ◾️ Collaborative behaviours and working ◾️ Management of aggregated performance and risk ◾️ Managed engagement at an executive level
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Best value from suppliers does not stop once contract negotiations end, and cannot be extracted from suppliers through regular performance management alone. Adopting a partnership approach with suppliers that offer strategic value is a means to encourage and incentivise suppliers to deliver innovation over and above what is stipulated in any contract.
As supply chains grow and become more complex, strategic partnerships with key suppliers will play an increasingly important role where boroughs seek to deliver innovation, security of supply, corporate social responsibility, and long-term cost savings.
"Meeting the contracted SLAs is the baseline for our performance. We focus less on basic KPIs, and instead on driving a partnership that delivers far more value than is described in the contract". (Relationship Manager, Agilisys)
Contract Managers Contract Managers will act as the relationship lead with key strategic suppliers, and coordinate the activities of other colleagues in collaborative work.
Procurement Directors Procurement Directors should have oversight over the management of strategic partnerships, taking an active approach in deciding which partnerships to strike and how to allocate resource to them.
CIOs / CDOs & Service Directors CIOs / CDOs and Service Directors should be consulted in the decision of which partnerships to strike, and participate in partnership activities.
Boroughs will benefit most from adopting a partnership approach if their supplier relationship management is:
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