Naomi Clews, of Millennial Procurement, explores why it’s so important to properly maintain supplier relationships
Imagine a garden, low-maintenance and beautiful. You maintain and protect it; you water, nurture and feed it. Now imagine a garden that is a tangled mess of weeds, thorns and riddled with pests. The abandonment of, and lack of interest in, this garden has left it in a sorry state, that will take much time and effort to put right.
Managing your suppliers is no different to managing a garden, metaphorically speaking. Taking the time to regularly nurture suppliers, weed out poor performance and dispose of the rot will result in less time spent dealing with supplier complaints and more time making your budget go further. Over the years, I’ve learnt a thing or two about managing suppliers, so, here’s my guide to how to manage suppliers effectively.
Get it right by:
#1 Understanding how the supplier perceives you
I discussed ‘Which customer are you?’ at EdExec LIVE in 2019. If you are receiving a poor service from your supplier, this may be because they consider you a ‘nuisance customer’. This does not necessarily mean you are on the telephone every five minutes (but it could do). It is more about how much you, as a customer, cost to serve. This could be due to your location or the fact that you place infrequent, low orders.
#2 Communicating openly and regularly with your suppliers
Maintaining an open and honest dialogue with your suppliers is the foundation of successful supplier management. If your supplier is reluctant to engage with you this may be further evidence that you are perceived as a nuisance customer and it is time to find a new supplier.
#3 Being consistent and treating all suppliers in the same way
This is really important; it’s a fundamental rule in procurement law that all suppliers must be treated in a fair and equal way. Be clear from the outset what your expectations are, what you will and will not tolerate. It’s a great idea to write a procurement policy and provide a copy to all of your suppliers.
Another great way to manage suppliers is to invite them to a meeting to discuss how they have performed against targets you set for them in a ‘performance review meeting’. Setting targets for suppliers may seem scary, but it needn’t be; you just need to think about how you want the supplier to act whilst working on your contract. This could be something as simple as, ‘I want the supplier to send me a consolidated invoice every month’.
The important thing to remember when setting targets for suppliers is that they must be SMART:
- Specific
- Measurable
- Achievable
- Realistic
- Timely
Setting targets is all well and good but you need to ensure the supplier reports back to you on their performance against your targets. This is easy to do; you do not need any fancy software, a simple Excel spreadsheet will suffice.
When inviting suppliers to a performance review meeting, it’s a good idea to provide them with an agenda. This helps the supplier to prepare and share the information that you require from them, in advance. It’s also useful for the supplier to know if they are expected to come alone or bring their manager with them.
Get it wrong by:
#1 Terminating a contract without speaking to the supplier first
After years of faithful service, tossing aside a supplier relationship, without an giving them an opportunity to compete for a contract, is becoming more common. This is often driven by consortia buying models, where economies of scale are perceived to be of greater importance than an established relationship. This approach is in danger of leading to the cannibalism of free markets, and the creation of monopolies, where buyers have little power to negotiate on price.
#2 Make short notice requests at unreasonable hours of the day and night
You may think of yourself as the most important person in your supplier’s life but – ‘newsflash’ – this seldom is the case. Good suppliers will try their best to respond promptly to your requests, but they have families and commitments too. If these requests are arriving at 23:00 hours, with a response required at 09:00 hours the next morning, it’s time to ask yourself if you are being unrealistic in your expectations.
#3 Forget the supplier is a person with feelings too
Finally, regardless of who the supplier is, the person you speak to on a regular basis is a person with feelings. Like everybody else, they wake up in the morning with the best intentions to serve you well and help in whatever way they can.
Although they are the face of their company, they cannot control every action of their company, or every person in their company. Inevitably, things go wrong and, as your dedicated point of contact, they will, no doubt, be on the receiving end of your dissatisfaction. Therefore, try to be assertive rather than aggressive, and allow them time to put the situation right.
Hope fully you will find these do’s and don’ts useful in your everyday life of working with suppliers, and you will cultivate your relationship and watch it blossom into something beautiful that you can be proud of.
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