The suppliers you work with are key to your business's success. It is therefore critical to pick the right suppliers from the get-go and to assess how things are going over time.
To ensure that the relationship works smoothly — and to figure out when to cut ties if it doesn't — make sure you follow these steps:
1. Focus on Payment Flexibility
When considering a new supplier, be sure to ask about payment terms. Of course, cash flow is important to both you and your supplier, but it's important to remember that those cash flow needs can change. When interviewing prospective suppliers, here are a few questions to ask to ensure that payment terms match your cash flow and their expectations:
Questions like these will help you choose suppliers invested in long- (or at least longer-) term relationships with their customers.
2. Schedule Frequent Check-ins
Establishing a schedule for regularly evaluating supplier relationships can be useful for identifying early on when a relationship just won't work. Such a model can also help you deepen relationships with suppliers who are going above and beyond.
Depending on your ordering habits, you should implement a quarterly or semi-annual review period for each of your suppliers. This level of frequency will keep those in your company responsible for ordering tuned in to the nuances of each supplier — and ensure that the money you spend with suppliers is money well spent.
3. Relate Supplier Performance to Pricing
You're no doubt looking to offer your customers the best possible value throughout their experience with your brand. Your suppliers should be offering you the same.
As you go through the process of assessing your current supplier relationships, consider the overall experience you’ve had in dealing with them. Have they been friendly and forthright? Have shipments and deliveries been on time? Reliable? Accurate? Are your suppliers communicating with you clearly, managing expectations and minimizing surprises?
Answers to those questions can justify a supplier’s pricing increase, justify the price you’re currently paying or prompt a pricing negotiation to compensate for areas needing improvement.
Nurturing relationships with suppliers pays off in many ways — not least, keeping your business running smoothly.
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