Supplier Relationship Management

Procurement isn’t just about cutting costs. The real game is value creation, and that’s why I like the Procurement Value Stick so much. This idea, inspired by Felix Oberholzer-Gee’s Value Stick, helps procurement teams maximise supplier relationships, optimise costs, and drive innovation. Here’s how I think about it: 🔹 Willingness-to-Pay (WTP) for Suppliers This is the maximum price procurement is willing to pay. Paying more isn’t always bad—sometimes, investing in a supplier brings: -Better service and reliability -Innovation and R&D investment -Lower long-term risk 🔹 Willingness-to-Sell (WTS) for Suppliers This is the minimum price a supplier is willing to accept. Procurement can lower this without damaging relationships by: -Improving contract terms (e.g., faster payments) -Reducing supplier costs (e.g., process efficiencies) -Offering long-term commitments 🔹 Procurement’s Role: Expanding the Value Gap The goal is to increase WTP (for strategic value) while decreasing WTS (for cost efficiency), without squeezing suppliers unfairly. This creates: ✅ More supplier-driven innovation ✅ Stronger, more sustainable partnerships ✅ Lower costs without compromising quality I’ve seen first-hand how the best procurement teams don’t just “negotiate harder.” They create win-win situations that benefit both the company and its suppliers. What do you think?

𝗔𝗿𝗲 𝘆𝗼𝘂 𝘀𝗲𝗲𝗶𝗻𝗴 𝗮 𝗚𝗲𝗻𝗔𝗜-𝗱𝗿𝗶𝘃𝗲𝗻 𝘂𝗽𝘁𝗶𝗰𝗸 𝗶𝗻 𝘆𝗼𝘂𝗿 𝘀𝗮𝘃𝗶𝗻𝗴𝘀 𝗽𝗶𝗽𝗲𝗹𝗶𝗻𝗲? You should! 𝗕𝗖𝗚 𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲𝘀 𝘂𝗽 𝘁𝗼 𝟰𝟱% 𝗼𝗳 𝗰𝗼𝘀𝘁 𝘀𝗮𝘃𝗶𝗻𝗴𝘀 𝗶𝗻 𝗦𝗼𝘂𝗿𝗰𝗶𝗻𝗴 specific categories like IT development, marketing, custom service and recruiting. So watch out for vendors raving about: ▪️new AI-features in their software ▪️faster go-to-market with their products ▪️AI augmented support channels for you to use ▪️productivity increase in their teams Generative AI in Procurement is not only about Procurement process improvement and better services to internal stakeholders. 𝗜𝘁'𝘀 𝗮 𝗿𝗮𝗿𝗲 𝗼𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝘆 𝘁𝗼 𝗶𝗻𝗶𝘁𝗶𝗮𝘁𝗲 𝗮 𝗿𝗲𝘃𝗶𝗲𝘄 𝗼𝗳 𝘀𝘂𝗽𝗽𝗹𝗶𝗲𝗿 𝗰𝗼𝘀𝘁 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲𝘀. And yet suppliers are not going to be proactively passing their Generative AI efficiencies on, on the contrary. They prefer to value-sell AI: ▪️Increasing prices and moving customers into new subscription models ▪️Justifying AI as an added premium and not a cost-saving enabler ▪️Handing over the risks for their own innovation investments 𝗧𝗵𝗲 𝗹𝗲𝗮𝗽 𝗼𝗳 𝗽𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝘃𝗶𝘁𝘆 𝗻𝗲𝗲𝗱𝘀 𝘁𝗼 𝗳𝗶𝗻𝗱 𝗮 𝘄𝗮𝘆 𝗶𝗻𝘁𝗼 𝘁𝗵𝗲 𝗰𝗼𝘀𝘁 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲, 𝘀𝗼𝗼𝗻𝗲𝗿 𝗼𝗿 𝗹𝗮𝘁𝗲𝗿. That's what all industrial evolutions have ultimately resulted in, isn't it? So if a supplier approaches you with a new AI-infused solution or service consider to have a conversation about their improved "cost structure": ▪️Where automation has lowered labor costs ▪️Pricing impact with clear add-on value beyond gimmicks ▪️How an "outcome-based" contract model can create participation ▪️Where AI-native suppliers can deliver better value Slapping GenAI on a product is not a reason for a price hike but an invitation for a review of cost structures and contracting models. After all, it's all in the negotiation strategy and the creation of mutual benefits and this is where Procurement has a natural leverage. So, are you going to request a cost structure review next time your suppliers tout their new AI-infused products now? How are you adapting your sourcing strategy in light of the new AI-infused product offerings of your suppliers?

A lot of apparel brands still evaluate suppliers too simply. In unstable markets, reliability is a profit lever. Usually on: • unit cost • average lead time • MOQs That is incomplete. In current market, supplier quality should be evaluated on volatility, not just cost. Because a “cheaper” vendor becomes expensive very quickly if they create: • repeated lead time swings • inbound uncertainty • forced air freight • reactive overbuying • missed full-price selling windows The hidden cost is not just in the PO. It is in the downstream planning damage. A more strategic supplier scorecard for a $10M+ apparel brand should include: 1. Lead time variance Not just average lead time, but how often actual lead time deviates meaningfully from plan. 2. Delay frequency How often a supplier slips by more than 7 days. 3. Recovery reliability When a delay happens, how often the supplier catches back up on the next cycle. 4. Margin impact How much extra markdown, stockout risk, or emergency freight is created by that supplier’s instability. 5. Assortment criticality A volatile supplier is much more dangerous when they support your top-volume SKUs. The cheapest supplier is not always the cheapest. And the “best” lead time is not always the shortest one.

𝗡𝘂𝘁𝗿𝗶𝗲𝗻𝘁𝘀: 𝘁𝗵𝗲 𝗵𝗶𝗱𝗱𝗲𝗻 𝗿𝗶𝘀𝗸 𝗶𝗻 𝗺𝗲𝗱𝗶𝗰𝗮𝗹 𝗰𝗮𝗻𝗻𝗮𝗯𝗶𝘀. 𝗔𝘂𝗱𝗶𝘁 𝘁𝗵𝗲𝗺, 𝘁𝗲𝘀𝘁 𝘁𝗵𝗲𝗺, 𝗱𝗼𝗰𝘂𝗺𝗲𝗻𝘁 𝗲𝘃𝗲𝗿𝘆𝘁𝗵𝗶𝗻𝗴. In compliant cultivation, people obsess over water, media and HVAC, yet nutrients often slip under the radar. They should not. I have witnessed first-hand how a quiet change in a nutrient line can introduce heavy metals, destabilise a grow and jeopardise patient safety. A good supplier will notify you of formula changes, not all will. Your duty is to verify. Why this matters • Heavy metals ride in with nutrients: arsenic, cadmium, lead and mercury. Plants are excellent accumulators, so a tiny impurity at input becomes a compliance failure at output. • Suppliers can reformulate at will, changing chelates, salts or anti-caking agents, which shifts impurity profiles and bioavailability. • Certificates of Analysis are a snapshot, not a guarantee. Independent verification is essential. What I recommend  𝟭. 𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿 𝗾𝘂𝗮𝗹𝗶𝘁𝘆 𝗮𝗴𝗿𝗲𝗲𝗺𝗲𝗻𝘁: change control, notification periods, batch traceability & a right to audit in writing. Demand batch-specific CoAs.  𝟮. 𝗢𝗻𝗯𝗼𝗮𝗿𝗱𝗶𝗻𝗴 𝗱𝘂𝗲 𝗱𝗶𝗹𝗶𝗴𝗲𝗻𝗰𝗲: audit the manufacturer, review source mines for salts & chelating agents, check ISO or GMP claims, confirm lot coding & tamper evidence.  𝟯. 𝗜𝗻𝗰𝗼𝗺𝗶𝗻𝗴 𝗤𝗖: screen new suppliers and products by ICP-MS for As, Cd, Pb and Hg, plus Ni and Cr where relevant. Retain a sample of every lot.  𝟰. 𝗢𝗻𝗴𝗼𝗶𝗻𝗴 𝘃𝗲𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: test the first three lots, then move to risk-based skip-lot testing. Always test after any change notice or if colour, solubility or EC looks off.  𝟱. 𝗪𝗮𝘁𝗲𝗿 𝗮𝗻𝗱 𝘀𝘆𝘀𝘁𝗲𝗺 𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝘀: test irrigation water for the same metals, clean fertigation tanks & lines to avoid residue concentration.  𝟲. 𝗧𝗿𝗮𝗰𝗲𝗮𝗯𝗶𝗹𝗶𝘁𝘆: record lot numbers used per zone and week so you can map any spike at harvest back to a specific lot in minutes.  𝟳. 𝗦𝗽𝗲𝗰𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗹𝗶𝗺𝗶𝘁𝘀: align to the target pharmacopeia & market. Reject out-of-spec lots, no exceptions.  𝟴. 𝗘𝘀𝗰𝗮𝗹𝗮𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗖𝗔𝗣𝗔: quarantine, investigate & notify the supplier in writing. Do not “blend to compliance” unless your quality system permits & you can prove conformance. 𝗥𝗲𝗱 𝗳𝗹𝗮𝗴𝘀: generic CoAs that never change, vague raw-material sourcing, “new and improved” labels without a formal change notice, unusual precipitation or odour after mixing and unexpected EC shifts. Bottom line, trust your suppliers & verify relentlessly. Nutrients are not a commodity in medical cannabis, they are a controlled input that deserves the same rigour you apply to your rooms, SOPs and release testing. Please reach out to me if you require guidance on carrying out these audits or you wish for me or one of my team to perform them for you. #MedicalCannabis #GACP #EUGMP #Quality #SupplierAudit #HeavyMetals #PatientSafety

The End of “We didn’t export to Russia” as a sanctions defence The UK authorities have concluded the largest compound settlement to date for a breach of Russia sanctions—another clear signal of how rapidly and aggressively sanctions enforcement is evolving. HM Revenue & Customs (HMRC) imposed a £1,160,725.67 penalty on a UK exporter for making goods available to Russia in breach of the Russia (Sanctions) (EU Exit) Regulations 2019. What makes this case particularly instructive from a compliance perspective is that it did not necessarily involve a direct export to Russia. Under UK sanctions law, the concept of “making goods available” is deliberately broad. It can capture scenarios where goods are supplied via intermediaries, including companies based in third countries but ultimately connected to Russia. For businesses operating within complex international supply chains, this case is a timely reminder that sanctions compliance is no longer limited to screening the immediate customer. Authorities increasingly expect companies to demonstrate an understanding of: - the ultimate end-user, - the ownership and control structure of counterparties, and - the risk of diversion through third countries. With enforcement intensifying across the UK, EU, and US, companies engaged in cross‑border trade should reassess whether their sanctions due diligence, end‑use verification, and supply‑chain monitoring are robust enough to identify indirect exposure. In practice, many recent sanctions breaches stem not from intentional misconduct, but from insufficient visibility into complex distribution and reseller networks. This case is a useful reminder that effective sanctions risk management increasingly requires a holistic, supply‑chain‑wide view—not just a transactional compliance check at the point of sale. https://lnkd.in/epJUjtU6 #SanctionsCompliance #ExportControls #TradeCompliance #UKSanctions #HMRC #InternationalTrade #SupplyChainRisk #ThirdCountryRisk #DueDiligence #KYC #EconomicSanctions #ComplianceLeadership #RiskManagement #GlobalTrade #EthicsAndCompliance #screening #duedilligence

The recent Philips Warning Letter from FDA calls out several things that are applicable to all teams, and we can learn from this helpful reminder: 1) you must maintain an approved supplier list, you must have a supplier management SOP and evidence you are following it ("Supplier Management Plans" are a great idea, with regular, documented performance and operations reviews) 2) you must assess your suppliers for adequacy and document this (audit your suppliers with auditors who understand the actual regulations those suppliers fall under and their services.... think GMP auditors auditing GCP suppliers -- there is real risk in that approach!)) 3) your metrics requirements and risk management plan must include metrics for every single thing you say you are going to measure - you should assess performance, not just simple metrics 4) your corrective actions (the "CA" in CAPA) must include HOW you will show these CAs are adequate ("Verification of Effectiveness") 5) your suppliers must have a requirement to notify you of changes in services ("Change Notification Process") in their contract with you 6) "internal suppliers" are still suppliers and fall under your ASL, supplier evaluation/audit, and Supplier Management Requirements 7) Your complaints process must include ALL aspects per 21 CFR 820.198(a) 8) You must have a complete CAPA procedure and evidence you are following it. You MUST open CAPAs when needed 9) and more https://lnkd.in/g3RQ3tTz

Your vendors are bleeding you dry—not money, time. After managing 100+ vendor relationships across Microsoft, Instacart, and our portfolio companies, I built a system that cuts project timelines by 70%. The problem: You think hiring experts means abdicating responsibility. Wrong. Your vendors manage 50 other clients. You're not their priority unless you make yourself one. Four Frameworks That Actually Work: 1. Deconstruct Your Blockers Don't ask "what's the update?" Ask "what specific approval are we waiting for?" Financial? Technical? Legal? You can't fix what you can't name. I've seen 6-week delays resolved in one call once we identified the actual blocker. 2. Own the Project Management Your vendors are specialists, not coordinators. Schedule the calls. Create the docs. Connect the dots. Yes, you're doing their job. It's also the highest-leverage work you can do. 3. Demand Time Boxes "We're working on it" = infinite timeline "Engineering review takes 5-7 days" = accountability Even vague deadlines beat no deadlines. One portfolio company cut deployment cycles 60% just by requiring time estimates. 4. Confidence ≠ Commitment "We're confident about approval" isn't "It's approved." Push for binary answers. This distinction alone prevents countless surprises. The Process: Monday: Status email to all parties Wednesday: 15-min sync if blocked Friday: Document decisions + next actions Rule: Never let a week pass without documented progress Real Results: Applied this to 6 portfolio companies last quarter: Project completion: 12 weeks → 4 weeks Cost overruns: Down 40% Vendor performance: Up 70% Best part? Our vendors started using our process with other clients. Advanced Play: Create quarterly vendor scorecards. Measure response time, timeline accuracy, and technical competence. Share transparently. Performance improves within one quarter. Why This Matters: Every week of delay costs runway. Every vendor inefficiency is a competitor's opportunity. The companies that scale aren't the ones with the best vendors—they're the ones who best manage them. Your Move: Pick your worst vendor relationship. Apply one framework this week. Document what changes. Vendor management isn't sexy, but neither is running out of runway because every project takes 3x longer than it should. What vendor challenges are you facing? Share what's worked (or hasn't) below. — Enjoy this? ♻️ Repost it to your network and follow Kevin Henrikson for more. Weekly frameworks on AI, startups, leadership, and scaling. Join 2000+ subscribers today: https://lnkd.in/gstGkhJF

🌍 The Backbone of Supply Chain Excellence: Supplier Quality Management (SQM) In today’s interconnected world, where global supply chains define competitive advantage, Supplier Quality Management (SQM) has become a critical enabler of success. It’s not just about ensuring that parts meet specifications—it's about building strategic partnerships that foster innovation, reduce risks, and drive continuous improvement. 🔑 Key Pillars of Effective SQM: ✅ Transparent Collaboration: Open communication and trust are vital for sustainable supplier relationships. ✅ Data-Driven Decisions: KPIs like Defect Rate (DR), On-Time Delivery (OTD), and Supplier PPM help identify performance gaps and opportunities. ✅ Proactive Risk Management: Regular audits and compliance tracking ensure supply chain resilience. ✅ Continuous Improvement: Working with suppliers to implement lean practices and Six Sigma tools boosts overall efficiency. ✅ Supplier Development: Investing in training and capability building for suppliers benefits everyone in the value chain. 💡 Did you know? Companies with robust supplier quality programs achieve up to 15% fewer product defects and reduce operational costs significantly. #SupplierQuality #QualityManagement #SupplyChainExcellence #ContinuousImprovement #LeanManufacturing #SixSigma #GlobalSupplyChain #OperationalExcellence #Collaboration #Innovation #RiskManagement #Industry4_0 #BusinessGrowth #ManufacturingExcellence #ProcessImprovement #SupplierDevelopment #SmartManufacturing #ProductQuality #RootCauseAnalysis #QualityAssurance #QualityEngineering #SupplierPerformance #CustomerSatisfaction #Kaizen #ZeroDefects #LogisticsOptimization #SupplyChainSustainability #PartnershipsMatter #ComplianceManagement #EngineeringExcellence

Procurement contract tip nobody teaches in corporate law: Red flags in vendor contracts can cost your company millions, and most teams spot them too late. I learned this the hard way while reviewing a procurement contract during my previous role. A simple clause caught my eye: “The supplier is not liable for any indirect, consequential, or incidental damages.” On the surface, it seemed standard. But when I dug deeper, I realized it could leave the company unprotected if a major delivery failed, causing huge operational losses. Since then, I follow this checklist for every procurement contract: ✅ Watch for one-sided liability clauses ✅ Check hidden automatic renewals ✅ Flag vague service level obligations ✅ Clarify payment terms and penalties ✅ Ensure clear termination rights Contracts aren’t just paperwork, they are the safety net of your business. If your legal team drafts a contract that leaves you guessing, it’s time to revisit your approach. #legalprofessionals #lawyers #lawstudents #law #contractattorney #contractlaw #businesslaw #businessagreement #contractspecialist #contractmanagement What’s the most overlooked red flag you have seen in a procurement contract ? I spent time jotting down, here’s my list. 👇 💾 Save. 💬 Comment. ♻️ Repost.

✅ "My Suppliers Are Certified, I Am Safe" Have you ever rested easy, thinking your supply chain was bulletproof because your suppliers were certified? This confidence is common among medical device manufacturers in the European Union, especially when dealing with suppliers boasting certifications like ISO 13485. But here’s the twist: Certifications alone might not be the safeguard you think they are. In general, we can differentiate between three levels of suppliers: ❗ Suppliers without any certificates might pose quality risks. 📜 Suppliers with general certificates like ISO 9001 offer some reassurance. 🏆 Suppliers with highly compatible certificates like ISO 13485 are seen as the gold standard. Choosing the third option often gives manufacturers a false sense of security, leading some to skip audits on these suppliers. However, the reality is starkly different. Even certified suppliers can have significant quality issues, expired certificates, prepare only for audit days, or misrepresent facts. 🚫 Here are some approaches how to dodge these pitfalls: 🔍 Continuous Monitoring: Don’t rely solely on certificates. Implement a system for ongoing supplier evaluation, beyond the initial certification check. This proactive approach helps catch any slip in quality or certification status in real time. 🕵️ Detailed Contractual Agreements: Implement comprehensive contractual agreements that specify quality and compliance expectations, along with the rights to conduct scheduled audits, review quality records, and enforce corrective actions as needed. ✔️ Cross-Verification: Don’t take their word for it; verify the validity of their certificates independently. This can involve checking with the issuing bodies or using third-party services specialized in supplier verification. The lesson here? Certifications are a starting point, not a finish line. In my personal experience, I had great suppliers and terrible ones. The last ones faked documents, lied about project progression, used forbidden materials during manufacturing and had no idea what production validation meant. Have you experienced challenges with certified suppliers? How do you ensure your supply chain remains robust and compliant? #medicaldevice #regulatoryaffairs #mdr #medicaldevices #eumdr #medtech