Choosing Suppliers

Why building good relations with suppliers matters

4 min read

25 September 2018

Deputy Editor, Real Business

Due to Brexit uncertainty, more companies are trying to forge better relationships with suppliers.

With Brexit on the horizon, 40% of UK businesses will seek to replace EU suppliers with domestic counterparts. This is according to research from the Chartered Institute of Procurement and Supply.

It also found that while some companies buckle under the stress of whether contracts will be renewed, 26% are taking a proactive approach. These companies are taking a masterclass in building supplier relationships.

The belief is that being on friendlier terms now will cement the future of a partnership – no matter the Brexit negotiation outcome. There are, of course, other benefits.

Providing mutual assurance and awareness

When you’re on friendlier terms, conflict will be easier to resolve. Suppliers will more likely seek ways to improve your operations and they will be able to see your potential needs arise before you do.

And the better you operate, the more productive your company will become – and the happier your customers will be.

Building a solid foundation

But strengthening a relationship is a two-way process. Just like you, suppliers want reliable customers. Here are five ways to keep your suppliers – current or potential – happy.

1. Pay on time – According to Tungsten Network, 47% of companies pay suppliers later than their agreement terms. Know going in what those payment terms are. Most suppliers will have a record of your payment history with them. This will decide whether you’re relegated to the black books or given incentives for good behaviour. Having pre-approved credit available is a valuable contingency plan.

2. Communication – To create a strong relationship, you need to stay in contact. Part of this communication involves checking in and making sure they’re equally as satisfied. Keep your supplier up-to-date with changes going on in your company. And if you have specific needs you feel aren’t being met, be up-front about it.

3. Know what’s required of you – You aren’t the only company your supplier is working with. With so many businesses needs to juggle, you will make an impression by making your supplier’s life easier. Sometimes you need to fill out documentation when goods are delivered. Other companies will require you to place orders via electronic data interchange. Knowing this ahead of time will save you and the supplier a lot of time.

4. Don’t dish out blame – Particularly in an uncertain economic environment, external factors can impact your business in a big way. Sometimes that leaves you off guard for the internal mistakes. Pointing fingers can be instinctual, but it’s an easy way to ruin a relationship with your supplier. When errors happen, open the floor for more communication and look at the situation from both sides.

5. Follow your service level agreements – An SLA is effectively a set of metrics and expectations for both parties set out in numerous clauses or separated into its own contract. If you choose to enter such an agreement, know that it focuses on the performance elements of the service.

It sets the tone of the relationship and underscores your obligations to the supplier as well. These work best when both parties commit, so decide whether you need one – and then stick to it like glue.