If you are in the process of setting up a new business, or are floating your plan with potential partners and investors, you have probably talked plenty about the supply chain. However, it is strange how rapidly our focus slips to the downstream aspect, on how you will engage with customers, build relationships with them, win new ones and so on.
Look upstream, and there are your suppliers, quietly fulfilling their duties as the tumbleweeds blow by. Here, we take a closer look at building successful and cost-effective relationships with suppliers.
Many businesses feel they are obliged to enter into exclusive supplier deals in order to get the best prices. In some cases, this might be true, but it is a dangerous assumption to make, and it puts all the power in the hands of the supplier.
It always makes sense to shop around and see who is offering the best deal; Printerinks cartridges, a London-based ink and toner shop, suggests that working with a supplier that guarantees the lowest price in the region is a good starting point. What’s more, when you order in a large quantity regularly, chances are, you’ll get even lower prices.
Be warned, though – don’t rush things by signing an exclusive deal with a supplier. Only consider an exclusive tie in if the supplier is going to really make it worth your while, and even then, ensure there is an exit clause so that you can escape the contract if things do not work out.
This is the communication age, so there is no excuse to fall short when it comes to communicating regularly, openly and transparently with your suppliers. Remember, you strive to build relationships with customers, and if your suppliers are any good, they will be trying to do the same thing, so make it a two way street.
When parties communicate well together, there is a better sense of trust, and that means that when things go wrong – which they inevitably do from time to time – you will be more likely to work constructively together to put them right, rather than start playing the blame game.
Memorialise the deal
Although you should generally avoid being tied in to one supplier, unless they give you a compelling reason to think otherwise, you should still have written supplier agreements in place. These memorialise everyone’s obligations when it comes to prices, service levels, delivery times, quality, payment terms and various other factors.
A written agreement prevents misunderstandings, and in the worst case, provides legal evidence in the event of a dispute. This might be the paper-free era, but always make sure the agreement is signed by both parties, or it will not be binding.
Technology is your friend
Technology has made a whole host of business processes quicker, easier and cheaper, while reducing errors. Procurement is no different. Online purchases are as much of a God-send in business as they are domestically, while fully-integrated systems that manage everything from procurement to payment use real-time information to keep everyone informed of exactly what is happening with a given order. This saves the time that would otherwise be spent making phone calls, sending emails and interrogating diverse systems.
Technology also makes routine tasks such as reordering supplies or renewing contracts and agreements quick and simple.