Your suppliers play a vital role in ensuring your businesses success, but this isn’t only because they provide you with vital goods and materials. Your suppliers offer much more if you seek out ways to build strong relationships with them. In this article we look at the benefits of building supplier relationships for your business.
Setting up deals with new suppliers can incur some seriously big charges, and these will often be upfront costs. However, by maintaining strong relationships with your suppliers, you may be able to foster a mutually beneficial relationship so that your business can avoid unnecessary costs that may come from renegotiating or ending contracts early.
Additionally, if you have worked on building strong relationships with your suppliers they may be more open to giving you discounts, for example for purchasing at an earlier date or for purchasing products in bulk.
Consolidating the Supply Team
Many companies have multiple suppliers and a complex supply chain to suit. This can be a costly way to run a business, and you may want to find ways to consolidate the supply team, reduce supply complexities and associated errors, and reduce costs overall.
By building supplier relationships, each party will gradually gain a better understanding of the needs of the other, and therefore will be better placed to help one another out. This may result in reducing the number of other suppliers which can drastically reduce costs and prevent inevitable mistakes that come with an overly complicated supply chain.
According to the IBM IBV Chief Procurement Officer Study, procurement organisations cited bringing in innovation into the company as a top priority, second only to reducing costs and increasing profitability. By building supplier relationships, you can increase the likelihood that suppliers will openly communicate helpful ideas for innovation with you.
Keeping the lines of communication open between supplier and business can encourage suppliers to share their ideas for product improvement, supply chain process innovation and service innovation.
How can you build strong supplier relationships?
So, with all these benefits of building supplier relationships, how can you go about ensuring strong relationships with your suppliers? One of the first ways to do this is to realise that your suppliers are not only your vendors – they are essentially your partners.
From this viewpoint recognise the importance and value in communicating with them regularly. Be sure to maintain strong and regular communication with each supplier, keeping them informed and up to date. Communicate regularly about your strategy and plans so that they know where they fit in and how they can help, plan for and benefit from those plans as well.
In keeping with this theme, it is vital that you recognise and appreciate your suppliers’ needs as well as your own so that you can ensure they are happy with the partnership. One of the most immediate ways to do this is to make sure you are paying them on time. By doing so, you will prove that you are a reliable customer and that you’re easy to work with, further encouraging them to support you in any way they can.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.