In a time of financial stringency a good relationship with your supplier becomes much more important. Remember, if you are tempted to coerce them into reducing prices, you have a direct interest in their survival in the market place, Maintaining a good relationship may be a means of ensuring that you both survive and that can’t be bad. So had do maintain you key relationships with suppliers.
- Make it a two way relationship! Seek to create value for both of you in terms of lower costs, reduced risks, greater efficiency, better quality, innovation and logistics – work together to improve.
- Improve communication! Invest in meetings with your suppliers that extend beyond the contractual and service issues. Get their feedback on how easy you are to do business with and respond positively. Give feedback to them.
- Segment you suppliers – categorize them! Determine with which of your suppliers your require a relationship that is tactical (short-term/ad hoc), approved (occasional), preferred (more frequent) or strategic ( you have a business dependency on them). Determine which are the most critical for your business and concentrate your relationship building efforts on them. But it will be useful to check ( with care) if they see things the same way – you may get some interesting answers!
- Ensure you have senior sponsorship! For your strategic suppliers it is a real plus if CEOs of client and supplier organizations know each other. If you can align the strategic objectives of both organisations, you can strengthen both
- Align information, roles, responsibilities’ and processes! Be clear about who is responsible for what on both sides of the relationship and how the relationship will be managed. Flexing your standard processes to simplify the relationship with your key strategic suppliers can pay huge dividends. Ensure your information systems and technology support the relationship you want to have with your suppliers.
- Develop the right skill set! Relationship management requires a different skill set to that traditionally found in contract management. Communications and positive influencing skills require a new perspective! You may need to invest in training and possibly some change in personnel to get it right
- Treat them fairly! If your cash flow allows it, pay their invoice quickly. If you know you have an on-going need and a business plan that supports it, guarantee future values. Be realistic with them about what the future holds for both of you and give them a forecast, if you can.
- Measure the benefits! Putting a price on any relationship is difficult. But having a good relationship with your supplier has many hard and soft benefits for example faster speed to market! You will also gain in innovation – a new source of ideas for your business as well as first rate information about potential changes in the market
Go for it! Because what you should be able to achieve with a really good relationship is quality, optimum pricing and a more resilient supply chain. All provide great value to your business!
Making Performance Meaningful 