The importance of supplier relationship management amid the Covid pandemic

WITH the ongoing pandemic and the multiple developments in terms of Covid-19 mutations, it is no question that it had and still has a widespread effect on several global economies. In the Philippines, it has a direct and heavy impact on micro, small businesses as they make up 88.5 percent of businesses in the country and employ 28.9 percent of total private sector employees. It is without a doubt that the uncertainty and disruption brought by the pandemic transformed how business owners approach technology, production and community. It is only natural for people to turn to close friends and family for support and reliability through hard times and emergencies. However, this support and reliability can be seen in supplier relationships and has shown its unprecedented value, especially in the time of uncertainty and disruption. More specifically, the entire supply chain across the country is heavily disrupted to this day as there are stricter requirements, disrupted operations and delayed shipments. This has led to business owners realizing the importance of effective supplier relationship management in the time of Covid-19.

It is no secret that excellent supplier relationship management will allow for overall smoother operations for both parties. It starts with the trust created in buyer-supplier relationships that will allow both parties to mitigate risks in the case of supply chain disruptions. Moreover, effective management of such relationships will allow for business owners to have an advantage in negotiations for pricing. However, business owners wouldn't have to shell out expenses on new negotiations if they already have a stable supplier that they partner with for the long term. Most importantly, strong buyer-supplier relationships provide business owners with the protection against price volatility as productive discussions on pricing structures, minimum order quantities and contract terms can reduce the effect of negative pricing shocks. With a strong buyer relationship, both parties can venture toward an efficient and strong supply chain where both buyer and supplier can adapt to each other's operations and practices, which could lead to a faster procurement and budget processing time. Overall, an event, such as a pandemic, is definitely easier to deal with when you have good terms with your suppliers as there is communication, transparency and trust.