If improving relationships with suppliers is on your procurement team’s New Year’s resolution list, you’ve come to the right place. In a world where even the longest-standing supplier relationships deserve frequent nurturing and care, procurement departments must regularly allocate energy and time to ensuring that these bonds are strong, reliable, and mutually beneficial.
These assurances aren’t always easy to achieve, and they’re particularly difficult to attain when procurement’s biggest goal is to cut costs.
“Unsurprisingly, the relationship is often conducted at arm’s length from beginning to end, which can be conducive to fair practice but also risks creating a damaging vacuum between the two parties,” TLT’s CPO Iain C. Steel writes in “The Tender Trap: understanding the supplier’s perspective”. “For procurement professionals, understanding the supplier’s perspective can have an overwhelmingly positive impact on the process and outcome.”
Four Moves to Make Right Now
Here are four ways to right this ship and get your supplier relationships on the right track for 2020:
1. View the relationship through a different lens. Your suppliers are not just vendors; they are your partners, and this partnership should be based not only on financial transactions, but also on mutual trust and loyalty. “Make your suppliers feel like they are a part of your business,” PurchaseControl advises. “Inform them about your processes, such as releases of new products and promotions, and listen to their concerns.”
2. Pay them on time. This will prove that you are a reliable customer and easy to work with. If you can’t make the payment on a date agreed upon, then inform the supplier as soon as possible with the date on which they can expect the payment. “Suppliers like timely payments just like you like timely action on their side,” PurchaseControl points out. It really is that simple.”
3. Open up those lines of communication. Communication is the key to any healthy relationship, and it’s a good point to keep this in mind when dealing with suppliers. “Communication will create transparency on both sides of the channel and prevent hiccups or missteps, like incorrect inventory count or missing purchase orders,” Ivalua’s Paul Noël points out in “Four top tips to improve supplier relationships”. “Having the right tools in place that allow both internal and external teams to quickly communicate and share documents and other information will help facilitate a more transparent, even-sided conversation.”
4. Dish out blame evenly. “Pointing fingers during a dispute is instinctual, but it’s important to distribute blame on all sides,” Noël writes, noting that an easy way to ruin a relationship with a supplier is to place all the blame on their processes when things go awry. When communication shuts down and problems arise, look at the situation from both sides of the transaction. “Opening the floor to a conversation around the issue and realizing that both sides are likely at fault shows respect,” he concludes, “translating to a better relationship and smoother future processes.”
