5 Steps to Building Successful Supplier Relationships
A good relationship with a supplier can be profitable for you and them. Strong links with your vendors provides strategic benefits ranging from better prices to access to important business information and resources. This kind of partnership doesn’t come easily. It needs to be nurtured over time. First off, you must choose suppliers that best match your company’s needs and culture. Next, you have to hold up your end of the deal by being a loyal and trustworthy customer. The tips below can help you through this process.
- Go beyond price.
No company wants to overspend but building a successful supplier relationship requires thinking about more than just price. The value of a vendor includes how well it can serve your company’s needs, as well as the needs of your customers. When assessing potential vendors, consider a full range of factors, including:
- What does the company charge?
- How will it ship its products, and how much will that cost?
- Does it offer discounts or other incentives?
- How quickly can I expect my order?
- How will it manage my account?
- How does it handle returns or other problems?
- Is it willing to customize orders or handle other special needs?
- Fully investigate finances.
It is common for suppliers to investigate the financial health of their customers, but it pays for your business to investigate a supplier’s financial condition too. By getting a credit report on a supplier, you will have a clearer picture of its potential as a long-term strategic partner. For example, a supplier with credit problems may have trouble meeting its obligations, which can have an impact on its ability to ship orders in timely manner.
- Check references
Gain a first-hand account of life with a potential supplier by contacting a supplier’s current customers. Start with standard concerns such as price, delivery, and other issues that relate to your business. Also be sure to ask out how the vendor handles problems, since even the best relationships have their occasional glitches.
- Maintain good faith.
Your ability to strike a long-term partnership with your suppliers depends a great deal on how you manage your end of the relationship. Strive for a relationship of mutual trust and respect. Start by paying your bills on time, which can go a long way to fostering good will and can help you out when you need your supplier to go the extra mile for you. Avoid quibbling over every bill or trying to get a better price on everything they sell – remember, your suppliers also need to make money. Also try to keep your expectations in line. As a new customer, do not expect to immediately get the same kind of attention that a long-standing customer receives – that is a privilege you may have to earn over time.
- Be clear with your needs.
Keep the lines of communication open between you and your suppliers. Clearly indicate any special needs you may have. For example, if you need a certain order to be rushed, ask the supplier what delivery options are available to you based on your specific deadline. Don’t expect to get something for nothing – again, you should anticipate having to pay for both the products and value-added services you receive.
- Preserve confidentiality
Your company can benefit over time through the open exchange of information with your key suppliers. Be sure to treat all strategic information confidentially and expect the same of your suppliers. If asked, be willing to sign a non-disclosure agreement, and abide by its terms. This is often not so much a matter of trust, but a legal way to ensure that proprietary data stays that way.