Managing suppliers

How do you manage supplier relationships effectively?

Manging suppliers is a key skill of the procurement profession. Without effective supplier management, a trusted relationship cannot be formed and will be susceptible to failure. Managing supplier relationships is important at all levels, it’s key that the people representing both parties can work comfortably together and hold a mutual respect. To manage suppliers effectively make sure:

What are the levels of supplier management?

Supplier management isn’t just about the relationship and communication you have with your supplier. The purpose of investing in a relationship with your supplier is to improve their performance in fulfilling the needs of your organisation. Equally, your organisation will have to implement changes for the performance to improve. Managing suppliers consists of two levels of management:

Managing supplier relationships vary across organisations. You may choose to have an ‘arm’s length’ relationship if there are low-value items involved. Or, you may choose to have a close, long-term collaborative relationship with a supplier, particularly when there are high-value and high-risk products involved. Whichever relationship you choose to have with your supplier, managing suppliers is a core skill of the procurement and supply profession.

How do you deal with difficult suppliers?

Manging suppliers isn’t easy and there will be instances where communication breaks down and the relationship becomes difficult. This can lead to a disruption in the supply chain and can end up bringing a huge amount of risk to your organisation. If you have a difficult supplier, you need to communicate and focus on the options of how to resolve any issues. There are several best practices that you can do to prevent difficult supplier relationships.

• Help your supplier to set and achieve standards of quality, quantity, delivery, price, and flexibility.
• Post contract appraisal allows you to monitor compliance, identify non-compliance and trigger feedback.
• Measure your supplier’s performance regularly. Give feedback, offer ways to improve and always give praise for things they are doing right.
• Recognise and reward the efforts your supplier is putting in into achieving its objectives. This boosts morale and ultimately strengthens the relationship.

• Identify potential barriers that may result in your supplier underperforming.
• Conflict management is essential should clashes arise or in cases where conflicts of interest take place.
• Exit strategies should be developed in case the team or the relationship is not working. These should be established before the relationship commences and discussed with all parties.

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