How to Build Supplier Relationships

We’re going to cover how to build supplier relationships in this article

When you're building a business, it's important to be able to rely on suppliers.

Whether you’re an established company or a new venture.

Growth cannot happen in isolation.

A company that works with a good supplier can be confident that they'll be able to get the products they need at the right price, and on time. Sounds decent to me.

It’s not all about the best price though.

You want to find a supplier who shares your values and vision for success. However, as important as supplier relationships are in any business relationship, it's easy for things to go wrong if communication isn't managed well from both sides.

Communication has to be regarded as the biggest point of separation between procurement teams that manage suppliers well and those that don’t.

Do we talk enough about Supplier Relationships?

The Dinosaurs don’t.

They talk about squeezing the supplier dry at every opportunity.

They talk about securing discounts for years 4 and 5 in soul-crushing negotiations that take forever to conclude.

For me, Supplier relationships are essential for a high-functioning and reliable supply chain. A good Supplier relationship can be built over time, but a bad Supplier relationship can be created in seconds.

Trust is the foundation of a good Supplier relationship and should be built on communication, shared vision, and mutual respect. This is very much in line with our points raised in last week's article on Supplier Relationship Management throughout 2022.

This isn’t all on the Supplier to get right though.

Understanding your suppliers is essential. Many things can help you understand them, and for a business, this is as important as understanding its customers. It helps you know how to collaborate with them and how to treat them.

Some of the things that can help you understand your suppliers include:

• Understanding their business model - what products or services they have, who they work with, and why they do so.

• Understanding their capabilities - what they can do or produce better than others in the market.

• Understanding their goals - where they want to go in future years when it comes to producing products/services at an affordable price point or offering the best customer service ever!

If you know these things then it would be easier for both of you because everyone knows what to expect from each other (the supplier will deliver a quality product/service on time while you will pay a fair price for this).

The building of the Supplier relationship starts from first contact.

Involving your suppliers in the procurement process, and listening to their point of view, can have a positive impact on the relationship.

• Suppliers can help you find new products and services that you didn’t even know existed. They can provide valuable insights into the market.

• They can help you understand how to improve your products and services, or even help you develop new ones altogether.

This is an important thing to do because it keeps your supply chain efficient and truly innovating. That’s a commercial asset that you need to protect and maintain at all costs.

Communication with Suppliers

Face-to-face communication is the best way to ensure that both parties needs are understood and met.

If possible, arrange a meeting in person at least once every quarter or so—and if this isn't feasible then regularly jump on a Zoom with your Suppliers.

Written documentation is also critical when building a new business relationship—both parties should adhere to consistent formats and styles in their written communications so as not to confuse each other or lose track of important points made earlier on in the process.

Ideally, you will be reliant on some kind of Supplier Management Software that will track all communications and the full lifecycle of everything that happens. Then you don’t need to mess around with email, slack and tracking points in an excel document. Jeez, I almost vomited just writing that part.

Right, back on track Procurement Legends.

💡 Be collaborative.

Once you’re on contract with your supplier you need to manage this through to completion. If elements aren’t working out how you both envisioned it, then talk. It’s simple to make a contract amendment. It’s not simple running a contract and trying to force something to work especially when you both dislike it.

All in all, building and maintaining supplier relationships is not easy. However, it’s worth the effort. Strong supplier relationships will ultimately lead to more competitive pricing, improved product quality and higher profitability for your business. Dinosaurs, tell me that doesn’t trump cost savings.

I DARE YOU.