Three Key Steps To Maintain Good Supplier Relationships


A dependable supplier makes life so much easier and when your relationship with suppliers is a mutually beneficial one then their dependability is almost guaranteed. What’s the key to developing this sort of relationship? Knowledge, clear service expectations and keeping faith.

Know your supplier

Don’t sign up with the first supplier you come across in the Yellow Pages. It pays to create a list of possible suppliers and check out how they perform. Ask them for customer references and contact the customer for their view on how well the supplier performs, particularly how they handle the glitches that will inevitably occur. Is the supplier prompt and helpful in resolving problems, or defensive and uncooperative?

Investigate the financial situation of potential suppliers. Smart suppliers investigate the financial health of would-be customers and it’s just as important to buyers that their supplier is also financially viable. Credit problems could signal future trouble in their ability to meet supply obligations.

Knowledge can be power when it comes to establishing a relationship with a supplier. An appreciation of how crucial your business’ orders will be for the supplier will give you an idea of the leverage you can apply to the arrangement. If your business is important for the supplier cost and condition negotiations will be weighed in your favour. Unfortunately, the reverse also applies. Then it might be an idea to see if you can get into a cooperative buying arrangement with other businesses so that your combined purchasing does carry some weight.

Clarify expectations about service

You need to think past price if you want to build a dependable supplier relationship. Your expectations about key service issues should be clearly spelled out and agreed upon with your supplier before any contract or purchase takes place. Once you have short listed a number of possible suppliers, ask for a quote or proposal and get their policies on these key areas: 

    - Price structure including any discount or other incentives, e.g. for early payment
    - Shipping methods, cost and delivery time
    - Payment mode and period
    - Handling of returns
    - Customising orders or dealing with other special needs

When it’s necessary to step outside the agreed structure, explain the situation and discuss the options. If you really need an order to be rushed, go over what delivery options there might be and what they would cost. Don’t expect to get something for nothing, extra service will mean extra cost. And don’t continually haggle about price - your supplier may become resentful and decide you aren’t a customer they want to deal with.

Keep good faith

The supplier/buyer relationship involves a set of mutual commitments. If the supplier fails to meet their end of the bargain it can have dire effects on the productivity of the buyer. Where the buyer reneges it can affect the cash flow of the supplier. Keeping faith is good for the business of each and good for the relationship. Any issue that arises from a failure of the supplier to maintain their service commitment or the buyer to pay on time or make unreasonable demands can quickly spiral into mutual recriminations and distrust.

If you feel that the level of service provided by your supplier is below par then contact them and tell them so. If your first contact is verbal, follow it up with a written summary of the issues to avoid any future misunderstandings after the conversation has finished. Tell them your opinion and expectations. Try and determine a mutually acceptable way forward. Likewise, the supplier may be having problems with you. One common cause of dissension is with respect to placing orders. An order placed well in advance of need gives the supplier sufficient time to meet the needed-by date. Orders placed late cause angst for both supplier and buyer.
Good communication can take the relationship beyond just working effectively with your supplier. Suppliers who trust their customers are likely to give them that little extra that can be so important. For instance, telling a retail customer which of their products are selling well at other outlets or, with their manufacturer customers, by suggesting potential substitutes for materials or ideas on how to improve production quality ideas. This advice can mean lower production costs and improved product.

Until next week,
Mike Reddy