Today’s economic climate means businesses must cut their costs and look for the lowest possible prices. At the same time, it’s more important than ever for businesses to maintain good relationships with their suppliers to ensure timely delivery of the best quality products.
There are simple steps that can be followed to help a business to be demanding of its suppliers without being seen as a difficult customer, and potentially damaging relationships.
- Ensure transparency and set the framework of the relationship from the start by making it clear to all prospective suppliers what is expected during the qualification and selection process.
- Negotiate contract terms with selected suppliers, making sure they meet all of the qualifying criteria, and are fully aware of any and all consequences should they breach their contract. At the same time describe the expected quality standards and delivery schedules, ensuring that they’re interpreted correctly.
- Once in place, it’s critical contract terms are upheld. If suppliers are able to break the terms of their contract without penalty, the purchasing company could be setting a precedent for defaults further down the line.
- Purchasers should always maintain a sufficient database that will allow them to validate negotiations with an alternative supplier should theirs be unable to guarantee delivery. Using more than one supplier in the bidding process, and regularly requesting quotations, means that suppliers will remain competitive, helping to keep costs down.
- Always paying on time will increase trust from suppliers but, while favourable payment terms can be negotiated in advance of an order, there should be no attempt to change them once the order is in place. Should there be difficulty in paying, the supplier should be contacted at the earliest opportunity with a reason and a new proposed payment date.
- A business’s most important suppliers should be considered as business partners, involved in the organisation’s strategy and sharing in its success. By keeping them up-to-date with important company news, and aware of any changes in staff or product lines, suppliers may be able to help find new customers for purchasers.
By ensuring all rules are set and agreed up front, by remaining open and transparent, and by maintaining two-way communication, companies can find the best possible prices while enjoying a profitable and trusting relationship with their suppliers.
☛ Pedro Paulo is CEO at Gatewit