Developing long-term mutually beneficial relationships with the key strategic suppliers is a critical point in improving performance in the supply chain: from gaining cost efficiency to attaining constant growth and development. To minimize supply chain risks, companies should treat their suppliers as partners. This means establishing clear and transparent relationships which will allow the suppliers to fully trust the customer. Let’s review the key points of establishing strong and mutually beneficial relationships with suppliers.
1. The suppliers are much more than just goods or service providers
First of all, they are partners. This partnership should be based not only on financial transactions but also on mutual trust and loyalty. Let the suppliers feel like they are an important part of your business. Enlighten them about processes in your company, such as new product launches or promotions. Listen to their advice and concerns. It would be great if you provide the supplier with a convenient tool to work with you.
2. Paying the suppliers on time is critical
If you don't want to lose sustainable suppliers make sure you pay them on time. You will prove that you are a reliable client. Inform your suppliers, if for any reason you are not able to perform payment on the scheduled date. Let the supplier know as soon as possible when payment can be performed. Suppliers like timely payments just as much as purchasers like on-time delivery. It is highly recommended to implement the solution that automatically sends you reminders on key important events within the contract, including the scheduled payments to the suppliers.
3. Establish a strong relationship with your suppliers
Make sure you maintain constant and clear communication with each of your suppliers. Inform them regularly of your strategies and your plans, so they will know how they can help you to execute your strategy and what they may suggest. Let the suppliers see what benefits they will receive by cooperating with you. If you appreciate their work, show them that. If something doesn't work, also let them know. Strong relationships with clear and constant communication make the suppliers more loyal.
4. Not all suppliers are the same. There is great supplier diversity: take into account culture, business processes, and document flow requirements
Since the world is becoming more and more interconnected, we encounter various suppliers located across the country or even around the world. Each city, state, or country has its own rules, laws, and terminology. For example, the word "vendor" is more commonly used in the US, while the word "supplier" is more commonly used in the UK. Or, for example, in Brazil and many other countries in South America, the documents must be physically stamped upon receipt.
If some of your suppliers are located in another country, you and your procurement team should be aware of cultural differences while communicating with these suppliers. Attitudes towards work always vary from one country to another. So, take this fact into account and make sure it's okay for you. You should also take into account the difference in currency, tax rates, and other financial issues. Finally, take into account the time zone difference, and always keep in mind the time when the supplier is available for communication.
Establishing long-term relationships with suppliers is critical, but you should not choose suppliers just because you like them. Select the most efficient and effective suppliers to work with and it would be clear that efficiency and effectiveness are real value for your business, not just a cost. Therefore, it is critical to have in place a convenient solution that would enable the procurement team to constantly keep tracking the interaction with suppliers and identify efficient and reliable suppliers as well as inefficient and unsustainable suppliers.
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