If a business is committed to long-term success, there’s only so much they can do alone; their reliability, credibility, and financial prosperity relies, in part, on its suppliers.
All it takes is one weak element of the supply chain to cause issues higher up; failure to deliver within an agreed time, for example, can prevent a company from providing their product or service to the end user, seriously breaking down trust. This results in low customer satisfaction, and a thoroughly frustrated team.
A good client relationship, however, can unlock some serious growth for your business. From innovation that you can work on together, such as those found in business IT support, to freeing up budget to invest in other areas of your business, it’s well within your interests to work on your supplier relationship like you would any other.
What are the benefits of strong supplier relationships?
Reliability
A strong supplier relationship means that communication is frequent, and consistency is high; this means that a supplier is motivated to go the extra mile in delivering goods and services on time, which means that the end user can come to expect reliability.
Constant innovation
If you’re on good terms with your suppliers, chances are you’ll be the first to hear about new goods and services that they’re able to offer you, which could be things that your team will find useful, or have benefits that you can pass onto your customers.
Forward-thinking suppliers that you’re regularly in contact with mean that you become a forward-thinking company too – and one that can comfortably reside in a higher price bracket by offering value.
Reduced costs
A great supplier relationship opens the door for negotiation; better deals on goods and services is made more possible when communication is good, and interactions are cordial.
Increased efficiency
The stronger the relationship with your suppliers, the more they’ll get to know your needs; they can make recommendations, streamline your orders and services, and even provide training to your team.
Building Effective Supplier Relationships
Selecting the Right Suppliers
To give your business the best chance of working with high quality suppliers that you can rely on, the criteria you use should be robust. This means taking the following into consideration:
Reliability – What assurances can the supplier make on regularity and timeframes? Do any of their clients have good things to say about how much they trust this supplier to deliver on their promises?
Cost: Does this supplier provide goods and/or services that fall within your budget? Is there room for negotiation? How do they compare cost-wise to other suppliers?
Quality: Does this supplier provide goods and/or services that reflect your brand’s values? Are they up to the job?
Reviews: Have you heard about this supplier through word of mouth? Did a trusted LinkedIn contact introduce them? What are their reviews like online? What common themes occur within them?
Communication: Are they local to your business? Are regular meetings, online if not face-to-face, possible? How often will you get to speak to them?
Cross referencing certification, asking around and gathering references, and doing research into things like financial statements and industry reports can all be useful exercises in evaluating a supplier’s suitability, too.
Establishing clear communication
Open and transparent communication needs to be baked into the supplier relationship from the off. This means establishing clear expectations, setting SLA’s (Service Level Agreements), agreeing on what the metrics of success look like, and opening up direct lines of communication.
Being respectful of one another’s time and additional priorities is also an important factor to consider at every stage of the process.
Creating sturdy but beneficial contracts
A wishy-washy agreement just won’t cut it; a contract between you and your supplier needs to protect you both, but also be fair and beneficial.
Maintaining and enhancing supplier relationships
The diligence you applied to the supplier selection process also needs to remain consistent in the maintenance of the relationship too. This means engaging in the following:
Regular performance reviews
Setting metrics and KPIs will allow you to monitor and evaluate supplier performance, so that issues can be resolved quickly, without confrontation, or financial losses.
Collaborative problem-solving
Taking the time to understand and address problems together, instead of simply issuing orders via email, can help strengthen the relationship, and improve the quality and efficiency of the goods and services provided. Every relationship has its ups and downs; supplier relationships are no different, and their success relies on the way you go about recovering from the troughs.
