Most companies aim for cost-cutting and streamlining their supply chain. Along with it, they focus on improving customer service. The relationship between a company and its suppliers plays a vital role in it. With a better relationship, both parties can exchange their thoughts to improve their services and make themselves accessible to each other.
That being said, a company’s relationship with its suppliers doesn’t improve overnight. It takes time, and a company needs to go a long way to be in such a position. Though this process requires a lot of pondering, you can simplify things by adopting a systematic and step-by-step approach. Given below are some of the steps you need to follow to improve your relationships with your suppliers.
Steps to enhance the relationship between a company and its suppliers
Streamlining the framework of supplier relationship management is one of the key business requirements of companies that have a business relationship with third-party suppliers. What matters more for such companies is to foster a long-term business relationship with their suppliers.
If you have been looking for ways to attain this goal, the steps given below will help you achieve it.
1. Ensure proper treatment of suppliers
One of the major mistakes that most companies make is that they treat their third-party suppliers as mere vendors. Instead, they must treat their suppliers as partners. This is important because there is more to a partnership with vendors than a few financial transactions.
The more you center your business relationship with your suppliers on mutual trust, the more you will make them feel like they are a part of your company. Whenever you roll out promotions or launch a new product, make sure that you keep them posted. Your suppliers may also have some concerns. Ensure that you listen to their concerns and give them practical solutions for addressing their problems.
2. Make your payments to suppliers in time
As the owner of a company that sits somewhere in the supply chain, you expect the delivery of your supplies in time. Similarly, your suppliers also expect timely payments. Payments at regular intervals assure your suppliers. So, as much as possible, try to clear your pending payments to your suppliers in time.
Sometimes it might not be possible for you to pay an outstanding amount to your supplier in time. If you ever get into such a situation, inform your supplier(s) beforehand. This action will help you set up the right expectations with them. This way, your suppliers will be mentally prepared and can adjust their budget accordingly.
3. Don’t hesitate to employ technology in improving the relationship with suppliers
No matter how many suppliers you partner with, monitoring their critical information is essential for your company. If your business has partnerships with several suppliers, using manual methods for tracking their critical data may not be feasible. Instead, you would be better off employing a software program for managing the relationship with your suppliers.
You might want to create and process your orders of supplies from your suppliers. Plus, you might want to track them from time to time. A smart way to do it is to deploy an advanced software program for purchase order management. Before taking a final call on it, do not forget to consider its integration options. Ideally, you would want to invest in an option that integrates all SRM tools into a single platform.
4. Work out detailed agreements with suppliers
One of the easiest ways to manage supplier relationship management (SRM) is to have detailed agreements with suppliers. It is all the more important if your company depends on certain vendors for regular supplies.
Consider your business requirements and mention them in your agreement. Some of the key aspects that you need to include are communications, terms of payment, delivery of products, price, and the description of products that your company needs.
Your idea should be to put everything in pen and paper in a way that does not create any confusion between your company and its suppliers. To ensure a smooth workflow between your team members and suppliers, create a flowchart. The more your team members remain informed about the agreement, the easier it will be for them to manage SRM with efficiency.
5. Weigh your risks and find solutions to mitigate them
If your company is a part of a complex supply chain, you must evaluate the various risk factors concerning your business activities or operations.
Some of your suppliers may not be cost-effective in terms of the items they supply to your company. But if they provide on-time supplies, you can consider them reliable. If you have a limited budget, you can adjust your overall budget by including other suppliers in your supply chain who provide cheap supplies.
Any compromise with one-time supplies is the last thing you would want, as it can affect your operations. It can eventually hurt your finances as you may fall short of achieving your financial targets.
Likewise, you also need to evaluate other risks linked with the profile of your vendors. It is of critical importance from the standpoint of risk mitigation. It is only by evaluating the various risks in SRM that you can come up with a solid plan to deal with emergencies that may create interruptions in your supply chain. In the long run, it will also help your company foster a solid relationship with existing suppliers based on mutual trust.
6. Consider the cultural differences between your company and vendors if they are based in another location
Are the vendors of your company located in other countries? If yes, you need to consider how their work culture is different from that of your company. This will help you understand the existing cultural differences on both sides.
Also, you cannot rule out the possibility of financial or currency-related differences. If suppliers belong to another country, they may have a different taxing structure as well. You can create a positive impression in your suppliers’ minds by accepting and respecting these differences.
Additionally, it will also help your company build a strong working relationship with suppliers as you will be more willing to sort out differences and find solutions to problems instead of focusing only on the differences.
A strong working relationship with suppliers provides a solid platform for companies related to the supply chain on which they can build the pillars of success. With the help of the aforementioned steps, you can enhance the existing business relationship between your company and its vendors.
Do you feel there is scope for improvement in your current relationship with your suppliers? Building an effective supplier relationship management strategy was never easy. But with iQuantum’s supplier management solutions, you could effortlessly get your hands into unprecedented insights that will not only help in supplier relationship management but also guide you in procuring the right products at right prices. Get in touch for a free demo.