The way you manage your relationship with your suppliers can greatly influence your profit margins. A commitment by you to a timely prompt payment can be a powerful incentive and can lead to closer, and more efficient partnerships between your company and your suppliers.
The selection and building of your supplier relationships is a continuous process that strives to balance your business needs with one of your vendors. The foundation for these relationships should include the following:
No. 1: Pay on Time
The first tip for building great supplier relationships is to pay them on time and as expected.
Most suppliers work on thin margins, therefore the cash flow is an important factor in their business. A company that pays on time, becomes a trusted and respected customer. Most vendors track payment history right in their customer relationship management software and sometimes even rate retailers based on how well they pay.
Merchants with a good payment history may receive better terms or different kinds of incentives that will enable you to provide reliable service to your customers.
No. 2: Set Clear and Achievable Goals
Establishing clear and achievable goals at the beginning of a business partnership is key to the fulfillment of overall business objectives. Good targets will be SMART (specific, measurable, achievable, relevant and timely). It is important that KPIs such as quality, financial projections, pricing, payment terms, and customer care standards are set according to the specific requirements of the business.
Most wholesalers require estimates of how many products a retailer expects within a certain period of time so that they can better understand how many items they should order themselves. Providing clear sales estimates will help vendors accurately plan.
No. 3: Provide adequate lead times.
Try to give your suppliers a sufficient lead time on your orders. Try to make an accurate forecast of your needs and share it with your vendors. Keep your suppliers abreast of any major changes in that estimation. When developing your lead times, it helps to have a good understanding of your suppliers’ production methods and needs.
No. 4: Know that They Have Other Customers
Small and mid-sized retailers have a lot of competitors, and wholesalers may be serving both your business and your closest competition.
It’s also important to keep in mind that, just like you, suppliers are in the business of making money. You should acknowledge that if you’re new to a relationship with a supplier, you can’t expect the same level of attention they give to other long-established accounts. However, in time you can put the basis of a mutually beneficial working relationship.
No. 5: Learn What Your Suppliers Need from You
As suppliers are serving both your business and probably some of your competitors; they have a number of relationships to maintain. In this case, it can be very helpful to understand what they need from you in order to facilitate your relationship.
Some suppliers request specific documentation. Such as having a liked to have a spreadsheet, filled out when goods are delivered than send by emailed or fax. A larger manufacturer selling direct could require its customers to place all orders via the electronic data interchange (EDI) standard.
Ensuring that your supplier receives the requested documents, via the preferred channel, can speed up the order processing.
No. 6: Share information.
Keep your suppliers aware of changes that are going on in your company. Let them know if there have been any changes in key personnel if you are planning to release new products, special promotions and so on. Many times, you’ll find that good suppliers can help you find new customers.
With the help of 24Stack and the apps and tools, they are offering you can now improve your business by speeding up payment to your suppliers. This will actively cultivate a good relationship with your vendors. Your supplier will most probably offer you in return the best trade credit terms possible. Good trade credit terms will maximize the company’s profitability!
You’ll be surprised at the goodwill and benefits you will earn by paying your suppliers on time!