Unprecedented disruptions have shown the importance of strong supplier relationships. Suppliers, manufacturers, and distributors are vital to business success; without high-quality, reliable suppliers, companies simply would not be able to provide clients and customers with what they need. Ensuring your organization builds robust relationships with vendors and seeks to establish effective supplier management strategies is instrumental in contributing to growth while minimizing organizational weakness.
So, what are the best ways to prioritize, and execute, strategic supply chain decisions to better protect your business from future disruption — making operations more efficient for everyone?
1. Consult with Your Suppliers & See Them as Partners
On a fundamental level, your suppliers are business partners – they may not be making organizational decisions with you, but they should be kept in the loop and updated with any vital changes.
Getting input and seeking constructive feedback is a great way to build a true partnership rather than a relationship based on an economic transaction.
When you ask your suppliers for their input and work on solutions together, you may find new cost management strategies and ways to boost efficiency that you wouldn’t have thought of without their involvement.
2. Cultivate Long Term Partnerships
Seeing your suppliers as trusted partners can lead to long-term agreements – something that’s beneficial to both parties.
Long-term partnerships allow you to create a more trusting relationship that prompt ensured supply, even when faced with disruption. Building a rapport with your suppliers opens the door to more opportunities by encouraging chain-wide innovation and, therefore, strategic growth.
3. Review Supplier Performance
Think of your suppliers as partners or team members, and hold them to the same high standards as staff.
Be upfront about your expectations regarding product quality, schedule requirements, etc. from the start. Once expectations are set, regularly track and review your supplier’s performance to see if all your targets are being hit.
Regular performance reviews will also ensure you can communicate any problems as soon as they arise.
4. Plan for Supply Chain Disruptions
In a perfect world, your suppliers would deliver what you need when you need it, but with unpredictable outside disruptions, this is not always possible. Understanding that your suppliers won’t always be able to achieve the impossible, and thus planning for inevitable risk, is essential.
Those not interested in building good relationships with suppliers might not be forewarned when problems are on the horizon. However, those who have a collaborative relationship can coordinate plans and solutions together.
In the face of disruptions, you may work to diversify your supply chain.
5. Think About Contract Clauses
One way to protect yourself from supply chain risk and disruption is with carefully constructed contracts and clauses that keep you safe.
Priority supply clauses can be especially useful if risk is high. Clauses like this protect you by ensuring you are a top priority customer if there is ever a situation where suppliers need to prioritize. This means disruptions are less likely to affect you as you’ll have ensured continuity.
The inclusion of clauses involving performance expectations and other elements you want to protect are also useful as they ensure suppliers are as diligent as possible in providing what you need while also providing an official framework they can refer back to.
6. Make the Most of Technology
These days, utilizing technology to increase strategic operations and supplier management should be a given. Managing good supplier relationships can be made far easier with tracking and procurement software.
Supplier management software ensures the centralization of information, enabling you to track orders made with your suppliers and view all essential information in one place.
7. Be Prompt About Payments
Just as you expect certain things of your suppliers, they expect certain things of you – namely, making payments on time.
Cultivating mutual respect and a meaningful partnership means proving you are trustworthy and can remain a steady business partner that good suppliers will want to work with again.
A good understanding of what you want from a supplier relationship and having the right processes in place can be invaluable when minimizing supply chain disruption and operation risk.
In the last few years, we’ve learned much about tackling supply chain issues and inefficiencies. We have supported countless organizations in getting back on track. To find out how Expense Reduction Analysts could help your business reduce costs, optimize processes, cultivate sustainable growth, and more, please get in touch with our team.