Strengthen your business with these supplier management tips.
Successful organizations understand the value of great relationships with suppliers. No matter what industry you are in, it is important to build trust and confidence with partners that play a vital role in your business. Maintaining healthy professional connections with your third-party vendors, service providers, manufacturers, and distributors help you maximize the value you’re getting out of these partnerships.
Now, supplier management is not simply about procuring the lowest possible deal you can get. It is constantly working with your suppliers and agreeing on win-win terms.
Here are 6 ways you can make your business soar through supplier management.
1. Take time to really understand your supplier’s business
It’s not enough to ask questions such as: Can they bring value to your business process? Are they trustworthy and reliable? Do you appreciate the way they work?
Check your compatibility as partners by further asking: Do their values match with your own? What can you do to make this partnership work more effectively? Do they have a track record of providing quality output? Seek to understand your supplier to become a business that businesses want to do business with.
2. Promote consistent communication
One of the most common missteps in supplier management is letting communication stop after the deal has been sealed. Lack of frequent, informal contacts result to failure of buyer-supplier relationships.
Talk about your goals and priorities. Share business knowledge, resources, and relevant information that may be beneficial for both parties. Consistent communication with suppliers shows them that you see them as an equal and you’re partnering with them in good faith. It builds trust, supports long-term goals, and improves risk management.
3. Honor contractual obligations and value the cost of time
Just as you need to have confidence that they will deliver correctly and on time, your supplier needs to be sure you’ll keep your end of the bargain. And this is shown most effectively through actions.
Simplify processes. Provide clear and complete specifications. Give them achievable lead times to meet your requirements. And most importantly, pay them fairly and on time.
4. Plan for emergency and major contingencies
Make plans to address worst-case scenarios. Another important part of supplier management is collaborating on risk management strategies and acceptable penalties.
Being ready for the unexpected is a great way to keep any relationship healthy. You want to protect your relationship with your supplier, while making sure your business is disaster-proof.
5. Incentivize and reward honesty
As you may have already realized by now, trust is the foundation of a solid buyer-supplier relationship. Finding suppliers who can identify their own challenges and voluntarily develop solutions that can positively impact your business is rare. And alongside audits, supplier honesty deserves recognition.
Express supplier appreciation and send rewards like Sodexo gift certificates to celebrate milestones and extra-mile efforts. Incentivizing excellence is a strong foundation for sustainable and profitable buyer-supplier partnerships.