In today’s global economy, supplier relationship management is crucial and more important than ever as industries consolidate.
One cannot merely select a supplier based on price and location anymore. There’s more that goes into it, including a professional and reliable working relationship. For years the procurement departments focused solely on price and cost.
As you master price and cost, you gain transparency into the suppliers’ cost structure. You want a supplier to have a healthy operating margin so that they can innovate, develop new products, and continue investing in the business. But how do you create a relationship with your suppliers that’s mutually beneficial? We’ve listed our best tips for building better supplier relationships.
1 - Understand Your Suppliers
A successful relationship starts by truly understanding your suppliers and knowing their strengths and weaknesses. Know what areas a supplier excels in, and figure out what their priorities are - this will help align your two companies. Open communication is critical. Without a direct and honest dialogue, it’s impossible to build trust. Establishing processes and identifying and tackling potential challenges is an excellent place to start. This way, if an issue does arise, you have a solid foundation for correcting any problems.
2 - Improve Forecasting
An essential part of the supplier relationship is ensuring your engine is running smoothly. Be responsible for knowing your needs, deadlines, and upcoming issues. When working with multiple suppliers, moving inventory takes time, and you can reduce stress on the supplier relationship by forecasting inventory levels and understanding lead times. Suppliers often deal with multiple manufacturers, asking them to drop everything to fulfill additional needs because you didn’t calculate demand effectively can hurt the relationship.
3 - Be Consistent
When suppliers know what to expect, they can more easily prepare. By being consistent, you help free your suppliers to do more. Respect your suppliers’ time, and they will respect yours. Easy order fulfillment frees up suppliers to further innovate and invest in their company. When your suppliers are more robust, you benefit. Share business intelligence and data with your suppliers.
4 - Invest in Technology
Like any tool, technology solutions should make you go faster with greater precision. Investing in automated solutions can help simplify the entire process. The key here is having a system in place that makes it easy to view your suppliers and analyze any risk factors. Your company will then be able to mitigate risk and provide valuable feedback to your suppliers. With the right solution, it’s easier for you to spot out-of-spec ingredients and items. When something is out of spec, you want to quickly and communicate the issue with your supplier. Automated solutions will immediately push the notification to all concerned parties.
5 - Spend Your Time Wisely
It takes a lot of time, effort, and resources to develop quality supplier relationships. If you are with a larger company, it may not be possible to have deep relationships with every supplier. Identify your key suppliers, determine where the most value lies, and work together to drive value across the supply chain. If you are aligned with your suppliers and treat them as partners, both businesses will reap the benefits.
TraceGains Supplier Management streamlines supplier qualification and sourcing by collecting and digitizing supplier documents, extracting the relevant data, and arranging it into performance dashboards and reports. Users can choose standard or custom dashboards for allergen, organic, country of origin, nutrition, risk analysis, and other mission-critical data. The system generates automatic alerts when supplier documents are missing, incomplete, or about to expire.
Leveraging TraceGains Network, users can easily connect with suppliers, and instantly receive necessary documents from a vast supplier document repository. Supplier Management makes supplier qualification and sourcing more efficient, provides better insight into supply chain risk, and accelerates time to market. Learn more here.