No business is an island, and working with suppliers is something that all businesses do – but how many do it effectively? Third party vendors supply you with many essential goods which, depending on the industry you are in, can be quite specialist – from Gas Oil Drums in the logistics business to packaging in the food service industry. Managing these relationships is a vital part of keeping your company running smoothly.
Taking a Proactive Approach
Although suppliers are an indispensable part of keeping our businesses running, many of us neglect to give these relationships the importance and strategic thinking that they warrant. It’s far better to adopt a forward thinking approach, which ensures that any potential issues are uncovered and dealt with early on, before they can derail the run of operations. The keys to improving performance and increasing profit margins start with improving supplier relationships and processes, which is far easier when you adopt a proactive and inclusive approach from day one.
Part Of The Family
It would be a mistake to treat the companies you work with as just vendors – they are part of your extended business family, and this approach will make your business so much stronger. Suppliers are an important part of your business to keep them up to date with top line strategy, new processes or products in the pipeline and current promotions. If they have concerns, listen to them. If they offer suggestions take them into consideration. They will have an unique perspective that may well help to make your business much stronger.
Leverage The Power Of Technology
Investing in a supplier management software solution is a great idea in order to keep all of the information available in one place. A good one will integrate with your purchase order and financing systems, allow you to track orders, pay for goods and give your suppliers reference numbers for their invoicing. You need to be able to work seamlessly across platforms for the best result.
Make Payments On Time
It’s a basic courtesy, but the biggest barrier to good working relationships with your suppliers is the most obvious – making timely payments without them having to chase you up. Doing this proves that you are not only a good customer, but willing to work with them. If there are going to be any problems in meeting their terms, tell them straight away. Streamline your payment processes so that you can move money quickly and efficiently.
Know The Difference Between Price And Value
The two things often get confused, but the price you pay for something is actually very separate from the value you derive from it. If you have some financial slack available, then utilise it to buy quality in bulk and negotiate a discount. The more open you are with your suppliers, the better the value they will be able to extend.
By having proper agreements in place, working with your suppliers as a team, keeping them informed about your plans, valuing the relationship and making timely payments, you’ll build stronger bonds that will benefit your business.