How to build stronger supplier relationships

Building, and maintaining strong supplier relationships is vital in the procurement and supply chain sector. Most businesses rely on a variety of external suppliers; manufacturers and vendors, distributors and so on. Making sure you communicate well with each supplier and that you listen to their needs and goals will help forge good long-term relationships and keep your business successful and stable. Aside from the obvious benefits to your business, it’s simply a lot more pleasant to work in this way! 

Read on to discover how to build stronger supplier relationships in procurement and supply chain. 

Understand how your supplier’s business operates

Pre-COVID 19 we would have recommended that you make efforts to meet long-term suppliers to get insights into how their business operates. Understanding how your supplier works gives you a better sense of how your businesses can complement and benefit each other. It also helps to form bonds and ‘put a face to the name’. In a nutshell, it helps builds loyalty. 

While this will be more challenging right now, there’s no reason why you can’t get a better understanding of your supplier’s business remotely. Why not ask your supplier if they could do a video call presentation or webinar about their company for you and your team? You could also sign up for their newsletter or follow the company on social media.

Keep one another informed

The better you communicate with your supplier the more successful your relationship will be. This doesn’t mean bombarding each other with all manner of information when it just isn’t relevant. One unwanted email too many and you risk being ignored in the future when you really do need to update them. The best way to make sure communications work in everyone’s interests is to establish some processes and expectations. What, how, why, and when will you be updating each other. What are the time scales for responses? Is it best to communicate by phone or email? 

It’s also important to make sure the right people are speaking to each other. Depending on the size of your respective companies there might be one central point of contact or there might be different people dealing with buying, finance, health and safety, logistics, and so on. Try to make your communication network as simple and straightforward as possible. If one of your team is acting as an intermediary between a number of parties for no reason, it’s time to make more direct introductions. 

Keep in regular contact with your suppliers and update them on strategic developments or changes in personnel as early on as possible. This helps them to adapt to and meet those changes. If there are any plans for growing or developing the business in the future - for either party - having good lines of communication will help you prepare for any impacts or effects on goods or services.

Be aware of cultural differences

The procurement and supply chain sector has a broad international reach. This means managing relationships with people from a wide variety of cultures. When you’re dealing with a supplier from a country or place you are unfamiliar with, do your homework. Your suppliers won’t expect you to understand every cultural difference but conducting some research, and asking questions if needs be, should put you in a better position to build rapport.

Pay on time

While good communication is important, paying your suppliers on time is vital for building strong relationships. Paying on time shows you are trustworthy and reliable. Never ignore the situation if you can’t make payment. Talk to your supplier ASAP and find a solution that will meet both company’s needs. In addition to this, both parties should be clear about any deadlines (and contingencies) and complete all admin tasks, including placing orders in good time.

Use service level agreements (SLAs) and supplier relationship agreements (SRAs) to define expectations

Using SLAs and SRAs are incredibly beneficial for procurement and supply chain businesses of all shapes and sizes. Both documents should clearly state out all the key metrics, KPIs and commitments that you expect from your supplier. The SRA should cover everything that both parties expect from your partnership such as product or service description, price, delivery and payment terms, the aforementioned communication processes and so forth. Both parties need to sign both documents. You can use your SLA and SRA to manage expectations, improve communication and track performance. And if things do go awry, you can refer to your documents to get back on the right footing. 

Pass on referrals

Recommendations and referrals are brilliant for businesses. If you like the work your supplier does for you then why not tell your peers about them. They might even do the same for you in the future! 

Make them feel appreciated

Your suppliers are not merely vendors. They are an integral part of your business. Ask for their feedback, take an interest in their company and staff and listen to their concerns. The communication processes we mentioned will help with that, as will simply taking the time to talk to them like human beings. We could all do with a bit more of that in our lives, after all! 

We hope these tips for building stronger supplier relationships have been useful. Don’t forget to let us know your tips on our social media channels. And if we can support your business with any recruitment challenges, let us know. We’d love to help.