Building a good relationship with suppliers
Bob Reiss
They’re your hidden growth assets. Follow these
four tips to become a valued customer.
Your approach to suppliers needs to be part of your strategic plan
since almost every company, whether product- or service-oriented, is
dependent on suppliers.
Many business owners seem to get this supplier issue backwards. They
think that because they write the order, they’re in the dominant
position and can exploit
Good suppliers are essential to your business’s good health and
growth |
it with unreasonable demands, including
personal perks.
Let’s get this right you need good and reliable suppliers. When you
find them, treat them like gold. Work as hard on building a good
supplier relationship as you do building a good relationship with your
customers.
And be loyal to your good suppliers. They are essential to your
business’s good health and growth.
Let’s briefly look at all the ways suppliers can impact your company.
Quality: Supplier components can positively or negatively affect the
quality of your product. Higher quality increases customer satisfaction
and decreases returns, which adds cash to your bottom line.
Timeliness: Their timely deliveries are crucial to how customers view
your reliability.
A quick turnaround can become the key to minimizing your inventory,
which in turn translates to less risk of inventory obsolescence and
lower cash needs.
Competitiveness: They can give you the one-up on your competition
based on their pricing, quality, reliability, technological
breakthroughs and knowledge of industry trends.
Innovation: Suppliers can make major contributions to your new
product development.
Remember, they live their product more than you do; they’re working
to be on the cutting edge of innovation for their product.
The good ones will understand your company, its industry and needs,
and can help you tweak your new idea.
Finance: If you’ve proven to be a considerate, loyal and paying
customer, you may be able to tap into your suppliers for additional
financing once you hit growth mode—or if you run into a cash crunch.
That financing may take the form of postponed debt, extended terms on
new purchases, a loan, or an investment in your company. All of these
improve your cash position.
It is OK to be a demanding customer
Having said how valuable and important a supplier can be to you, I’ll
now say that you should not be a patsy.
You can be a demanding customer—just be fair. State your quality and
time needs clearly.
Hold your suppliers to their agreements. Make sure they stay
competitive. Tell them you never expect to pay higher prices than other
purchasers.
There are times you need to replace a supplier because you have
outgrown them and they can’t perform to your new expectations. Before
dropping them, however, you might try to help them change to keep up
with you.
Also, it’s not prudent to rely on one supplier. If that supplier has
a strike or a fire, you don’t want to be in a position where you’d be
shut down too.
So keep a backup or multiple suppliers on hand—and don’t be
embarrassed to tell your key supplier that you’re doing so. They will
appreciate your honesty.
How to be a valued customer
These ideas assume, of course, that you are a customer that somebody
out there wants. In order to be a valued customer to your suppliers,
here are a few things you should do:
1. Always pay on time. For the sake of emphasis, I’ll repeat this
one: Pay your bills on time! You can negotiate for favourable payment
terms before you place an order, but once the order is placed, don’t
renege or attempt to change the rules.
If you can’t, call up your suppliers and tell them why and when you
will pay.
Don’t play games with suppliers’ cash.
You’ll be absolutely amazed at the goodwill and benefits you will
earn by observing this simple rule.
2. Provide adequate lead times. Try to give suppliers as much lead
time as possible on your orders.
Unless there’s a compelling, competitive reason not to, share with
them an honest projection of your needs and keep them abreast of any
significant changes in that estimation.
When developing your lead times, it helps to be knowledgeable about
your suppliers’ production methods and needs.
3. Personalize the relationship. Visit suppliers’ offices. While
you’re at it, include them in some of your strategy meetings.
Invite them to break bread and invite them to your office parties and
picnics.
4. Share information. Keep the good suppliers aware of what’s going
on in your company.
Tell them about changes in key personnel, new products, special
promotions and so on.
Many times, you’ll find that good suppliers can be help you find new
customers.
Developing good relationships with suppliers is not a complicated
process. Be communicative, treat them fairly, be demanding (coupled with
loyalty) and pay them on time. It’s that easy. Entrepreneur.com |