Category Archives: Supplier Management

Who’s managing your business?

You probably think you are managing your business. And for the most part you would be correct. However, if you deal with suppliers at any level, their performance can have a significant effect on your business. When you can’t get the products you need at the prices you want, when shipments arrive late or are incorrect, your business is impacted.

So I believe that if you are not actively managing your relationships with your suppliers, they are managing your business to their advantage. And it doesn’t matter if you are Wal Mart or the corner deli. Your suppliers are shipping your products on their schedule, buying products and selling it to you at a price that works for them, and managing your business to suit themselves. They aren’t necessarily evil – they are just running a business.

So how do you get them on your side? Here are my thoughts:

1. Be easy to work with. Demanding customers may get what they want in the short-term, but over time this kind of behavior builds resentment. Share all the information you can about your business. Help them understand your challenges – you want them to care about your business and its success.

2. Build relationships with your suppliers. Find out all you can about your suppliers’ world. What challenges are they facing? What capabilities do they wish they had? Work with them to allow them to give you great service. You want to be the company that they will drop everything for when you call.

3. Don’t focus only on price. Every supplier can compete on price. Lowball offers get them noticed and in the door. You want suppliers that will stick with you over time. Find out the total cost of doing business with them. Product pricing is only one aspect. What about shipping and freight terms? How about availability or customization? Can they give you exclusivity on any products?  Find out what they can do that will help drive both your businesses.

4. Understand that there will be service failures. Every supplier stumbles. Let them. And then watch how they recover. If they recover well and the impact to your business is minimal, send them more business. Don’t expect them to be perfect. You aren’t perfect, either.

If you take the attitude that you need your suppliers as much as they need you, and take the time to build solid relationships with them, they can give you a competitive advantage by understanding how to best support your business.



Coaching suppliers

In an earlier post I emphasized that treating your suppliers as customers was a good business practice. A further point is that most suppliers benefit from being coached on how to best support your business. If you make them guess as to how to best support you, you will very likely be disappointed in their performance. On the other hand, if you teach them how to help you succeed, both you and your suppliers can improve the processes and tactics that support business success and growth.

If your suppliers are not meeting your expectations or if their lack of performance is hurting your business, your first reaction is likely to be a desire to want to penalize them. Unless you have already gone through the process of discussing and defining the issue with them and agreeing on a plan for improvement and given them time to improve, you are only hurting yourself when you penalize them. By treating them badly you may scare them into complying, but that’s all you will get. You won’t be encouraging them to want to better learn how to support you.

In my 20+ years managing suppliers for 3 big box retailers, I know from experience that coaching suppliers can significantly improve their performance and their willingness to help you grow your business. Coaching suppliers effectively helps them better collaborate with you and also allows them to increase their emotional investment in your success. And you want to be the company that suppliers compete to support.


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