The world is shrinking thanks to technological and political advancements, and as the economy continues to become more global, there’s one element of business that seems to continually fall to the wayside: relationships. It’s not that strong business relationships don’t exist; they’re just often considered a “nice-to-have” rather than a business imperative. But that’s quickly changing.

Companies are working harder than ever to meet regulatory demands and calls from stakeholders for greater transparency. As a result, they are discovering they can’t meet these goals alone — and they are now relying heavily on their supply chains to fill in data gaps and provide the insights needed to meet requirements and make strategic decisions.

To that end, here’s how businesses can create a foundation for productive supplier engagement through education, best practices, and collaboration.

Making Requests, Not Demands

Unfortunately, it’s not uncommon for professionals collecting supply chain data to immediately resort to brute force tactics with suppliers, like financial penalties, negative supplier scorecards, and decreasing the volume of orders. Predictably, as the old adage “you catch more flies with honey than vinegar” tells us, you’re going to get mixed results with this approach. Worse still, you’re likely to poison your relationships before they begin.

This isn’t to say that an “old world” approach that uses negative reinforcement to ensure suppliers provide the necessary data doesn’t work. Instead, it means that tactics like escalating requests and issuing penalties should be incorporated into a larger strategy — one that has a collaborative mindset at its heart.

Our relationships with suppliers aren’t as transactional as they once were. In addition to needing suppliers to provide parts, we now need them to provide data and an open line of communication. Our approach needs to be mindful of these new and growing demands.

What does this look like in your day-to-day? In short, treating suppliers as valued partners rather than order takers. It can no longer be about demands and consequences. We now operate in the realm of mutual benefits and shared goals. By demonstrating that you're in it together, suppliers are more likely to be responsive and invested in your supply chain sustainability goals.

Best Practices for Supplier Engagement

Now that we have a better sense of what we want out of our supplier relationships, how do we get there?

Make Sure Suppliers Have the Full Picture

Education needs to be a core element of your supplier engagement strategy, but what you should be teaching your suppliers may not be obvious. Informing them about regulations like REACH or RoHS isn’t enough — they need to know why these regulations matter to your company.

By understanding your needs, suppliers can better understand their role in your journey to deep supply chain sustainability. They become a trusted partner in protecting your operations, reputation, and bottom line. When they understand your needs and the “why,” they’re more likely to provide more accurate data more quickly.

Show Suppliers What Success Looks Like

Suppliers can’t succeed unless they know what success looks like. Take examples from your suppliers that are leading partners in your sustainability journey and share them with your other suppliers through case studies. Now you’ve set clear expectations as well as tangible benchmarks for performance.

Give Suppliers a Reason to Succeed

These interactions can’t be all stick and no carrot. The rules have changed, and you’re expecting more from suppliers than ever before. Give them a reason to care. While repercussions for non-compliance or poor performance are necessary, they should never be a first resort — especially when it’s caused by a mistake rather than willful negligence.

Start with positive reinforcement. Consider offering incentives such as preferred supplier status, better terms, or priority for future business opportunities. You’ll find suppliers are not only more responsive, but more pleasant and eager to help.

Bringing It All Together

Your suppliers aren’t order takers; they’re partners in your continued success in business and supply chain sustainability. Treating them as such will help you meet your regulatory requirements and contribute to a more responsible and sustainable global economy.

Interested in learning more about supplier engagement? Keep an eye out in November for part two of this blog, where we’ll discuss supplier scoring and what you should be doing with the results.