Business Management: Leverage your suppliers
How to work more closely with your suppliers.
by Megan Sullivan
Some of the most important relationships you’ll develop in the course of running your business are your relationships with third-party vendors and suppliers.
As a businessperson, you will need to rely on other experts for their knowledge of materials, care and maintenance of equipment and more. You can’t be expected to know everything or source everything you need for your business, which is why these relationships are essential to long-term business success.
Intuit’s QuickBooks experts recently developed 10 tips for managing suppliers that apply, whether or not your current working relationship is smooth sailing or has happened to hit the rocks.
1. Choose wisely
If you have the luxury of choosing between multiple suppliers, take the time to examine each one’s pros and cons. Determine which one can give you what you need, when you need it and for the right price. Evaluate everything from their response time to their contract terms to their costs. Relationships are most successful if they have the time to grow, so select a supplier with which you and your organization will be able to grow.
2. Communicate
The easiest way to engender ill will in any relationship is a lack of communication. Take the time to communicate with your suppliers and ask for the same type of outreach in return. This is especially important regarding timelines.
If a project timeline changes, your supplier should be one of the first to know. An earlier alert keeps them in the loop and could make a mutually agreed-upon solution possible. Your supplier should be able to problem-solve and troubleshoot issues pertaining to material quality and delivery, so use these traits to your advantage when you’re facing difficulties.
Do not use communication as a way to test your suppliers. If you need them to meet a specific date, explicitly tell them. Don’t ask them to guess or read your mind and then be surprised when they can’t.
3. Understand their business
While you don’t need to understand every nuance about a supplier’s business model or operating procedures, having a general working knowledge of their policies will help you to better understand their values.
It will also give you context to the challenges they face, which is especially important if you work in a business with shifting priorities and deadlines that requires a great amount of flexibility. If you understand why a supplier might say no, it makes it much easier to plan ahead.
4. Plan for contingencies
There are normal everyday contingencies you should plan for, like late shipments or weather-ruined pallets. There are also major disruptions to plan for, such as natural disasters or critical equipment failures. Most of these contingencies will probably be developed in-house, but you should make a concession for your suppliers and make sure they have a clear understanding of how you will expect them to behave should the unthinkable happen.
5. Put as much thought into rewards as penalties
Penalties are there for those times when someone does not hold up his or her end of the deal. With that in mind, there should also be a reward for when work is above and beyond expectations. Thinking about worst-case scenarios is important, but also assume that suppliers will exceed your expectations and they should be rewarded when they do. A reward could be an especially prompt payment or a simple thank you note.
6. Accept accountability
Both the client and the supplier are responsible for the success or failure of the working relationship. Accept accountability for your place in the process by acknowledging that your decisions, delayed timing or changes in project scope directly impact the supplier’s ability to do his or her job well.
7. Invest in supplier management software
This is really to preserve your sanity or the sanity of your office manager. Supplier relationship management (SRM) software is especially important as the number of suppliers with which you work with grows. It can be used to monitor supplier performance and keep all of your supplier details in one place. Many SRM programs also interface with accounting software, making for a seamless invoicing experience.
8. Pay on time
Your supplier does a job and should be compensated for it. Consider the last time a customer was late paying you. Even if they had told you the check would be a few days late, consider the slight annoyance you felt having to wait and the relief you felt when the check finally arrived. Paying your vendors on time demonstrates that you respect them and the work they do.
9. Stay flexible
This is different than planning for disasters or setbacks in your production schedule. Staying flexible means adapting to everyday issues that arise.
10. Continuously work on strengthening your relationship
Look for opportunities outside of general day-to-day contact. Invite them if you have a quarterly meeting or make a special invitation to have them visit your facility. Use this time to forge stronger bonds. Ask your suppliers for feedback.
Encourage them to have open discussions with you about ways that the relationship could work better or more efficiently. Supplier relationships are partnerships and as such, are also a two-way street.
Forming long-lasting and mutually beneficial relationships with suppliers will aid you in keeping your schedule on time and ensure that rent, sell and maintain quality products. These reasons are important enough to make sure that you manage your supplier relationships well.
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Editor note: Megan Sullivan is a writer with experience in the advertising and digital media space.
This article originally appeared in the July- August 2020 issue of Pro Contractor Rentals. ©2020 Urbain Communications LLC. All rights reserved.
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