Your Partners are not Cost-Centers

When was the last time you saw an ad from Nvidia? Or Amazon? Or Facebook, Google, Netflix… I can keep going. Chances are you haven‘t seen any in a while, if ever. That‘s because the world‘s biggest companies don‘t spend much on their advertising. In fact, many of the leading companies in any industry tend to underspend on marketing. What do they direct those gigantic budgets to then? Product. And how to acquire it, build it, and get it to consumers in the most effective and efficient way possible.

Yep, it‘s time to talk about the value chain.

Courtesy of WIX Media

Sure, talking about the value chain isn’t exactly exciting. There’s no way around that: it means looking at endless spreadsheets of products, negotiating prices and margins, balancing them with how gains are shared across participants across supply, production, and distribution, and finding compromises so that everyone goes home only slightly disappointed.

Vertical integration is such a buzzword in business schools because every company dreams of a day when they no longer need to negotiate endless contracts with suppliers. But just as no country can produce every product its people desire, and every country has a particular area where it enjoys a competitive advantage (shout out to Adam Smith’s Invisible Hand here), so companies also gain much more from specialization than they could from being generalists.

Nobody can go it alone. Especially not companies.

So, the value chain and its many knots, twists, and turns remains a necessary inconvenience in our lives. But, as the name may suggest, there’s value in it. Hidden value. Which we can extract, if we’re smart about how we approach it.

We all know the story of American Airlines removing a single olive from their first-class salads and saving about $40,000 annually. They optimized their procurement without any significant effect on the quality of service. A minor adjustment. A major win.

More recently, IBM has led a campaign of “cognitive supply chains,” where AI is leveraged to optimize procurement and fulfillment processes. Even during the peak of the COVID-19 pandemic, IBM maintained a 100% order fulfillment rate for clients as a result.

Where are we going with this?

There’s value in the value chain. And the partners you have within it, they aren’t just there to extort you out of your hard-won margins. We’re not sharing the pie. We are growing it together. Let’s learn how.

Sis Steps to extract more value from your value chain partnerships

1. Reframe your mindset: suppliers are strategic assets

Your suppliers aren’t just where your money goes. They’re where your money comes from.

Strategic supplier collaboration means seeing them as extensions of your business, as potential innovation labs, as agility engines, as value creators. When you shift the conversation from "how can we reduce what we pay you" to "how can we both make more money together," you unlock something that cost-cutting never could: upside.

Organizations that treat suppliers as partners drive not only innovation but resilience. From co-developing new product features to improving sustainability efforts, it’s the quality of the relationship that determines the value of the outcome. Think of this as a shift from contract management to collaboration management.

Example: Toyota’s long-standing keiretsu model, where suppliers are treated as close partners with shared goals, has helped it weather supply shocks far better than peers focused purely on price.

2. Data transparency: build a shared reality

Good decisions come from good data. Great partnerships come from shared data.

Supply chain visibility is the buzzword here, but the reality is that most businesses are still working in silos. Give suppliers access to performance dashboards, demand forecasts, and real-time alerts. This turns your relationship from transactional to transformational.

When your supplier knows your projections and you know their limitations, both sides can course-correct before disaster strikes. This kind of collaboration is no longer optional. It’s the cost of entry for a modern, resilient business. McKinsey calls this “data democratization.” In simpler terms? No secrets. No surprises.

Example: Procter & Gamble shares sales forecasts with Walmart, enabling joint inventory planning and reducing stockouts; a win for both sides.

3. Co-innovate at the source, not just the surface

Innovation doesn’t happen in a vacuum. It happens in collaboration.

Most companies still see innovation as something they do despite their supply chain. But some of the best ideas come from the ground up; quite literally. Your suppliers are sitting on years of experience, tribal knowledge, process hacks, market insight, and even technology that you don’t have. Why wouldn’t you leverage that?

Invite them into your design rooms, not just your back rooms.

Example: Patagonia worked with material suppliers to co-develop Yulex, a plant-based wetsuit material that outperformed traditional neoprene and boosted its brand equity in sustainability-conscious markets. Not only did it reduce their environmental footprint, but it also helped create marketing advantages and pricing power. These wins don’t come from isolated R&D labs. They come from integrating supplier capabilities into your strategic roadmap.

4. Build trust before you need it

Resilience doesn’t come from the best contracts. It comes from the best relationships.

When the unexpected hits (and it will), companies with deep trust across their ecosystem respond faster, recover better, and win bigger. During the COVID-19 pandemic, some companies folded. Others thrived. What made the difference wasn’t just technology or scale. It was the strength of the relationships in their supply chains. IBM kept things moving with zero disruption. Why? Because they had built digital collaboration models and predictive intelligence systems that kept suppliers close and information flowing.

The companies that will survive the next disruption aren’t the ones with the lowest costs, but the ones with the deepest trust and most flexible partnerships. That’s not just sentiment. That’s strategy.

Trust isn’t a soft metric. It’s the ultimate force multiplier.

5. Bake in sustainability and ethics, don’t bolt them on

The old thinking: Sustainability is a PR move.The new thinking: Sustainability is a value driver.

Consumers care. Regulators care. Employees care. If your supply chain can’t prove its ethical footprint, you’re not just risking fines, you’re risking irrelevance. From circular economies to ethical sourcing, suppliers often hold the keys to your ESG strategy. Work with them early and often, not just when the audit comes around. Sustainability done in partnership often reduces costs. Think less waste, smarter logistics, lower energy consumption. Better buying practices create better supplier relationships, which in turn improve compliance, efficiency, and innovation.

Example: Unilever co-developed “smallholder sourcing” programs in emerging markets, creating stable income for suppliers and ensuring resilient, traceable supply chains for the company. That’s profit with purpose.

6. Stop fighting over the pie. Start growing it.

The zero-sum game is over. The future is co-investment, co-ownership, and co-creation.

Partner on go-to-market strategies. Share cost savings from process improvements. Explore new customer segments together. The pie gets bigger only when everyone’s invested in baking it.

Example: In the Dutch flower industry, growers, auction houses, and logistics providers co-developed an integrated digital platform to track flowers from farm to vase, cutting waste, improving margins, and delighting customers.

Conclusion: Change the game

Too many businesses walk into supplier meetings thinking: “If they win, I lose.”That thinking is not just outdated, it’s dangerous.

The real opportunity is not at the negotiation table. It’s at the strategy table. It’s not in the discounts. It’s in the design.

The next time you open that procurement spreadsheet or gear up for another margin negotiation, remember: your partners are not cost-drivers. They’re potential accelerators. If you treat them like adversaries, you get friction. So ask yourself: What if this isn’t a supplier? What if this is my co-founder?

There’s value in the value chain. And it’s time we started acting like it.