How to Deal With Underperforming Suppliers

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So, you’ve identified that some of your suppliers are underperforming. Whether it’s consistently late deliveries or delays in production, it’s time to manage what’s going on.

Start talking more frequently

Instead of waiting until your order is due into the workshop and finding out it hasn’t arrived, get in contact with the supplier sooner. Set reminders in your online inventory management system about when the item is due and have strict check-in points. Try to have open and non-threatening conversations. However, make sure to emphasise the timeline and how important it is to your schedule. See if there is anything you can do to support the delivery of the item and find out what issues are causing the delays.

There are many ways to foster a great supplier relationship.

Contract management systems

Just like online inventory management systems, contract management systems can be implemented alongside this to keep both the supplier and buyer organised. It puts both parties on the same page and provides a detailed level of contract visibility. If a contract isn’t fulfilled and the supplier is underperforming, this can be a wake-up call for both parties. Oversight needs to increase and the business buying from the supplier needs to clarify their needs and expectations. This system could be connected to your online inventory management system for a more streamlined approach.

Check your contract

Contracts can provide an immense amount of guidance and help you understand your rights. From the beginning, both sides should outline what their contractual obligations are to each other. When performance is clearly lacking from a supplier and they are failing to deliver, turn to your contract.

If you’ve set out the expectations clearly from the beginning, then it could be time to seek legal support to action the agreement from your initial contract. This could mean that the company could stop paying the supplier and seek a new supplier immediately. Depending on the clauses in the contract, a supplier may not have another opportunity to continue working with this business. It may seem aggressive, but unfortunately, businesses are reliant on suppliers who deliver. If they can’t hold up their end of the contract, then it is completely within the rights of the business to look elsewhere.

Whether your business is big or small, make sure you have a thorough contract written before you commence business together. It can be hard to predict what’s going to happen down the line and a contract is there to protect you.

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Melanie - Unleashed Software

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.

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