Tips for Improving Your Supplier Relationships
Building long-term, strategic relationships with suppliers should be a goal for every retailer. Improving supplier relationship management (SRM) brings benefits that help you deliver high-quality products and services to your customers. These supplier management tips will help your company as it strategises for more effective supplier relationship management.
1. Treat Your Suppliers Like Partners
Suppliers play a crucial role in your business operations. Although the financial transactions your company makes with its suppliers are integral to your relationship, mutually beneficial trading partnerships are also founded on trust and loyalty. Treating your suppliers like business partners exhibits respect and lays a solid foundation for a long-term partnership.
One way to treat suppliers like partners is by communicating effectively. Keeping suppliers updated on any business changes, like promotions, helps them adjust their manufacturing workflows accordingly. Genuinely listen to your suppliers' concerns and work with them to address challenges.
2. Pay Suppliers on Time
Maintaining a positive cash flow is a significant concern for your suppliers. One of the most critical steps in cultivating better supplier relationships is ensuring timely payments for products delivered.
Making prompt invoice payments proves your company is a reliable and trustworthy customer. If you never or rarely miss an invoice, your suppliers may be more understanding if your company has a cash flow issue, and you need to adjust your payment schedule. If your company must miss a payment on the agreed-upon date, communicate the situation as early as possible before the invoice due date and provide the date when you will make payment.
3. Communicate Frequently and Effectively
Communicating frequently keeps your suppliers in the loop and ensures they have ample time to accommodate your requests. Updating your suppliers as your business strategies change helps them identify areas where they can help and may result in more productive collaboration.
It's also beneficial to communicate with your suppliers when you don't have a request. Thank them for their hard work and take time to learn about their processes and how they source materials. By interacting with suppliers more frequently and organically, your company can improve communication when there's a disruption or challenge to address.
4. Develop Detailed Supplier Agreements
Your company and your suppliers need to be on the same page about your expectations for the partnership. A supplier relationship agreement is an excellent tool for limiting misunderstandings and disagreements and mitigating disruptions in the workflow.
At the start of your supplier relationship, create an agreement with them that details information such as:
- The items you're purchasing
- Delivery requirements
- Payment terms
- Minimum order quantities
Both parties should agree on the terms and sign the supplier agreement. Reassess these agreements regularly, rather than automatically renewing them, to ensure your service agreements match your suppliers’ capabilities and your needs.
5. Capitalise on Your Team's Strengths
The people on your team have various strengths and skills that make them suited to different roles in your SRM strategy. Soft skills like timeliness and effective communication are critical for improving supplier relationships, so putting the right people in the right place will help advance your partnerships and strengthen them for the future.
Getting your team on board with improving your company's supplier relationships is also critical. A committed team will bring the enthusiasm and drive for progress that makes supplier relationships a true success. Invest in communicating the value of improving supplier relationships to your team and providing support as they navigate the changes.
6. Think Globally
The economy grows increasingly global each year. As your business works to improve supplier relationships, thinking globally can go a long way. A global mindset helps your company determine the best ways to communicate with suppliers across regions as well as sizes and verticals, so you can strengthen your partnerships. Even if your company is a small- to mid-sized business and isn't planning to expand internationally soon, thinking globally allows you to meet suppliers' needs.
Compliance with regional data security regulations is a major factor companies should consider. If your retail company uses EDI software, achieving transaction compliance and security is a must. Optimising your operations for compliance with the relevant requirements where your supplier is based enables you to communicate with them efficiently while protecting your data.
7. Designate a Supplier Relationship Manager
A helpful role to create in your SRM process is a supplier relationship manager. This manager is responsible for overseeing vendor relationships, managing communications, and informing changes and updates to the rest of your team. The purpose of this role is to streamline your SRM strategy and build long-lasting connections with suppliers.
You might create a new role at your company or assign these tasks to someone who also manages other responsibilities. Regardless, adding a designated team member to oversee supplier relationships can ensure tasks are completed on time and partnerships are profitable for everyone involved.
8. Communicate Objectives Clearly
Communicating frequently helps improve supplier relationships, but it's also crucial that you communicate effectively. Your company should set clear objectives for its partnerships with suppliers and communicate them internally and to your partners.
When you begin a new partnership, outline your business objectives upfront and identify information like the KPIs you plan to use to evaluate supplier performance. Informing suppliers of these goals at the outset enables them to prepare for success. Throughout your partnership, communicate shifts in customer demand and changes in your company's priorities. Doing so can solve problems before they become an issue.
9. Continually Monitor Risks
Constantly evaluate the risks a supplier might pose to your operations to collaborate on solutions and eliminate potential issues. When your company has strong relationships with its suppliers, you can discuss their performance and avert potential crises due to upstream issues.
Keep in mind that supplier risks can change over time. A once-reliable supplier might start to lag in its lead times. Conversely, a supplier that once represented a cybersecurity risk may have implemented new data security measures. It's particularly essential to monitor the risks of new suppliers. Security is one of the top risks of supplier onboarding, so your company needs effective ways to secure its and its customers' personal identification information.
10. Leverage Technology
A critical part of an effective SRM strategy is using technology to track, analyse, and improve supplier relationships. Supplier management software is invaluable for gathering and organising information about your suppliers' performance. With this technology, your company gains visibility into each supplier's metrics to better identify areas for growth.
Implementing solutions like EDI software in your SRM strategy enables seamless data transfer to increase accuracy and automation. If your suppliers aren't EDI capable, you can still integrate your data successfully using a supplier enablement platform. This solution integrates with a wide range of systems to convert order information into the most efficient document formats.
Enhance Your Supplier Relationships
When it comes to improving supplier relationship management, a proactive approach that prioritises effective communication is the best strategy. By implementing practices like treating suppliers like partners, monitoring risk, and utilising effective technology, your company can build long-term supplier relationships that help you and your partners grow.
TrueCommerce provides fully managed EDI solutions and supplier enablement platforms so your company can communicate easily with its suppliers. If you're interested in learning more about how TrueCommerce helps retailers manage their supplier relationships, request a free demo of our EDI and supplier enablement solutions today.
About the Author: Brian Lindner is the Director of Field Marketing at TrueCommerce. He has spent the last 15 years in B2B project management and marketing. His focus is on Vendor Managed Inventory and related eCommerce solutions that help companies save time through automation. Brian enjoys spending time with his wife and 2 kids and in his spare time brews delicious craft beer with his friends.