Tag Archives: supply chain partners

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.

 

Suppliers as customers

Recently I organized a meeting with one of my key suppliers to discuss the next steps in building the business. In all the points we discussed the one that bothered me the most – and still bothers me today – is how this company’s employees were being treated by my company. I heard several stories about how these employees were routinely denied access to systems and inventory data that they needed to do their jobs, and how in some cases the retail employees simply ignored them. And these were people who had come into the store to help manage the inventory and merchandising of product!

What is interesting about this is if my company’s employees had treated a customer or another employee in this manner, they would have been disciplined. But somehow it was OK to abuse a supplier. I guess the policies governing proper associate behavior apply only in certain cases. Not very professional, in my opinion. Respect for the individual indeed!

Your suppliers deserve the same treatment as your best customers. You can’t do business without them. Abusing them isn’t going to help you in the long run. And all the talk about respect for individuals goes right out the window if the policies are not applied consistently.

I have been managing suppliers for major retailers for nearly 20 years and consistently I have been impressed with their willingness to support my business, even when we ask them to do outrageous things. My experience tells me that most suppliers really want to be good partners. They depend on others to distribute and market their products. So why can’t companies collaborate so both sides win?

I believe too many companies still see suppliers as a cost center and not a partner who also wants to grow the business. This attitude will undermine the relationship every time. If you see your suppliers as competitors for your profits, you won’t collaborate.

Want to grow your business? Take some time and really get to know your suppliers. Let them educate you about their business. Let them show you how they can better support you and offer you insights into their industry.

Want a competitive advantage? Be the company that your suppliers want to support. Treat them well so that when issues come up there will be no question that they will go out of their way to support you. I can tell you from experience that treating your suppliers well, knowing what they can offer, and giving them the chance to shine in supporting your business will build the kind of loyalty that your competitors will envy.

Supply chain education

Supply chains and all the processes and systems that support them are very complex. People who don’t work directly with these processes and systems often have incorrect ideas about what can and cannot be accomplished by them. And it is the supply chain leaders’ responsibility to make sure that the people who depend on the supply chain understand its capabilities and limitations.

Here are some facts that I have found are often misunderstood:

  1. Supply chains don’t like variability. Sudden changes to demand or planning disrupt them, and these disruptions drive up costs. Planning and communication in advance is essential for making supply chain operations successful and profitable. There is a cost to serving every customer need exactly the way every customer expects.
  2. Strategic changes most often require supply chain changes. Buying product via importing it vs. buying it domestically requires very different strategies and practices, which need to be set up and tested before going live.
  3. Not all parts of your business benefit equally from supply chain practices. Highly seasonal businesses often require shipping outside the normal processes, so the cost saving for these products can be substantially lower than for commodity products that can be shipped in consistent quantities year-round.
  4. You will get better performance from your supply chain if you collaborate with your supply chain partners. Those who work in supply chain know that the purpose of the processes and systems is to support the business. Let them know how they can support you. If you demand that they accommodate to your business needs, you may find that they will support you – but only as far as they have to.
  5. Your suppliers have supply chains too. Before product ever arrives in your facilities, it has already gone through your supplier’s supply chain. If the supplier’s systems and processes are poor, you won’t be able to make up for this by building a better system for yourself. It may be to your advantage to share supply chain expertise and practices with them to improve both companies’ performance.
  6. Supply chains are strategic. Wal-Mart, Home Depot and Amazon have proven that improving supply chain processes and systems can dramatically improve corporate performance. Good business planning should include supply chain partners. Without them you may be building wish lists rather than plans.
  7. Supply chain reporting and tracking can help both you and your suppliers increase customer service and build business. Every supply chain has systems or processes that can be improved, or that need to be reviewed regularly as business grows and changes. Share as much as you can with your suppliers and help them see where they need to improve rather than using the data to beat them up when they don’t perform.
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