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Supplier Innovation based on strong bonds

Experts have said that suppliers are more likely to work with innovative technologies and ideas if they have a strong relationship with their customers.

Chun Zhang and John Henke claim that if both the consumer company and supplier state their long-term innovation intentions when entering into a contract confidence and working relations will improve the standard of business within and between the two companies. The duo also recommended three collaborative activities which can help build and maintain strong bonds between businesses.Firstly, the purchaser business should try and involve the supplier in certain processes. Including suppliers in areas like product development can lead to new ideas for a product that you never knew existed and might help you to reduce costs as well. Secondly, always try to demonstrate openness. When information is shared between businesses it beneficial to both parties and helps the companies to build bonds.Finally, working closely with a supplier will help a company to improve its competitiveness, quality and cost, and also expand the business of the supplier.

Zhang and Henke claim that suppliers will be more likely to invest in products and innovations associated with companies that they have developed long-term healthy contracts with.

They recommend that companies try not to set objectives that may conflict with what they want from suppliers as this can have an adverse effect when it comes to supplier innovation.

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