Companies heavily rely on the network of suppliers to efficiently meet customer demands and for procurement quality. In fact, an enterprise can’t drive a competitive advantage without maintaining good supplier management practices.
Whether you call them vendors, wholesalers, or distributors, the fact remains that suppliers form the foundation of a world-leading company. Many global conglomerates make supplier relationship management a high priority, which is part of the reason they’re industry leaders.
Establishing or improving supplier relationship management can be a tricky process. That’s where we come in. We’re writing this article to help you learn the best ways to improve supplier relationship management.
Why Do You Need Supplier Relationship Management?
First, we need to address the importance of supplier relationship management. You can’t establish a plan without knowing the reasons in the first place.
Ask any supply chain expert, and they’ll tell you that supplier relationship management is vital for the optimal performance of the supply chain. A harmonious organizational partnership with the vendor ensures there’s no supply lapse.
Moreover, an organization can also reduce its downtime by developing strategies with the supplier. A robust supply chain that can work without unexpected splits and stoppages can give your business a competitive edge in the market.
Additionally, effective supplier relationship management also helps lower procurement costs. Now that we’ve established the importance of supplier management let’s look at the ways to establish or improve it.
Consistent and Punctual Payments
Cash flow is an often overlooked aspect of supplier relationship management, even though it’s a big headache for all businesses. Your supplier is also running a business and can suffer from similar issues. You can help them by not missing invoices and making consistent, timely payments.
Punctual payments are one of the best ways to improve supplier relationship management. They’ll even help you build enough rapport with your vendor that they might start offering you special offers and exclusive deals.
Establish an SRM Position
Small and medium-sized businesses have to focus on so many other issues that they tend to forget about supplier relationship management. It means they don’t have a procurement officer.
Consequently, this leads to several employees handling different parts of the company’s supply chain. Not having a streamlined internal system can make things a hassle for the supplier, who must interact with a new employee for every procurement process.
Therefore, you need to choose a supplier relationship manager (SRM) who can help you build good relations with vendors. An SRM should preferably be a supply chain expert who handles all procurement activities and is the face of your company for all supplier interactions.
Be Upfront in Addressing Roadblocks and Concerns
Be proactive in addressing any concerns, challenges, ideas, or roadblocks. Having a lazy attitude or delaying matters is a habit that can cost you a lot of money in the long run.
Moreover, it can also adversely affect relations with the supplier. Whether you have an issue regarding the procurement management system or the contract terms, promptly address roadblocks to improve supplier relationship management.
Establishing effective communication with your vendors also helps clear misunderstandings. For instance, you might have issues with the supplier not fulfilling certain expectations. However, after taking a proactive approach and taking the issue to them, you may also learn the said expectations were not outlined in the contract.
As a result, promptly addressing roadblocks is one of the best ways to improve supplier management relationships.
Don’t Rely on Handshake Deals
If you’ve decided to shake hands with a supplier for a certain project, do a favor to both parties and pen a well-thought-out contract. A contract is legally binding and helps prevent procurement and payment issues in the future.
Additionally, don’t ink a half-baked contract without touching base on all factors, such as terms, liabilities, and responsibilities. Many vendors and buyers have a falling out because of poorly composed contracts.
In contrast, a well-thought-out contract addresses all potential concerns and is designed to benefit both you and the supplier. Sometimes a contract might even need to be revised to improve supplier relationship management.
Again, communication goes a long way in promoting healthy work relationships. You can ensure that your company gets the best deal by negotiating with the vendor before drawing out contract terms. You’ll be surprised to know vendors happily welcome healthy negotiations from buyers.
Doing your due diligence for inking supplier contracts is one of the best ways to improve supplier relationship management.
Schedule Regular Meetings
A supplier is every business owner’s best friend. You need to select suppliers whose goals align with yours, and then you need to protect them. For example, you can identify a strategic supplier that might offer your business an exclusive contract or some other competitive edge. Since such a vendor has the potential to be a long-term business partner, you need to take extra steps not to jeopardize your relationship with them.
Moreover, schedule regular meetings with them to figure out new ways to improve your partnership. Meeting in person is always a good idea, but online conference calls are also convenient and efficient. Paying attention to the supplier’s business needs is a good way to show them you care and improve supplier relationship management.
Supplier Relationship Management with Microsys
Experts at Microsys bring you the best supplier relationship management software, SimplyPurchasing. It’s a procurement and vendor management software that will streamline your management needs and improve your vendor relationship.
Similar softwares are integral to good supplier relationship management practices. SimplyPurchasing is a cost-effective service for all types and scales of businesses. It offers remarkable features like contract generation, payment tracking, and vendor collaborations.
Our team at Microsys is dedicated to providing you with superior network, IT, and business application software solutions. Contact us today if you want to increase the growth margins for your small or medium-sized business!