Top 7 Strategies to Manage Your Suppliers
By Kate Marsden
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The chances are, whatever business you are in, you use suppliers to help you in specialist areas. But do you know how much you spend with them – and are you sure you are getting the most from your money and the skills that they have? Managing your suppliers more effectively can make a big difference to the bottom line and it’s worth spending time on this. Make sure you have the following strategies in place.
If you stop and add it up, you might be surprised how much you spend with various suppliers. When was the last time you reviewed the prices based on changes of your needs? Work on the big ticket items and forget about the rest. Look at how you can get better value for money that also works for them as a supplier – for example discounts for commitments in volumes or early payment terms. For your part, always make sure you pay on time and do not hold payments back unless you really have to.
- Contract Terms
Remember though, it’s not just about the base price. Look at the other terms of your deals and think about if they still work for you. For example, how long have you agreed to work with this supplier? Is it an “exclusive” agreement or not? What notice terms do you need to provide? The more you can put in writing the better – even if it feels very formal, the more you agree up front the better.
Suppliers often fall away because of some details that haven’t been thought through well enough and have a negative impact on your business.
Look for suppliers that have some proven track record of quality (accreditation, awards or testimonials help) – but ultimately the only person who can judge if they meet your quality standards or not is you. So, be clear on what your expectations are and stick to them clearly. This can include product quality, their service to you, the account management or things like innovation or added value.
Put some measures in place that you can review and see how they are doing. Tell the supplier what is important to you and they can provide you with reports and information. Don’t bog yourself down with daily or weekly data with loads of detail that you will stop looking at. It’s better to have a few key measures to look at every month – then you can spend time thinking about what to do if there are issues.
Make sure your supplier understands the bigger picture – what you are trying to achieve and where they fit into that. They are more likely to be proactive about meeting your needs if they understand the end game.
Most suppliers don’t work out long term because of the relationship rather than the cost. Be prepared to put in some time to making it work – the more you spend with them and the more customer impact they have, the more time it’s worth for you. For important suppliers this means things like meeting regularly and visiting their premises, updating them about your business changes and where you are going longer term, helping them with their business through references or referrals. Managing suppliers tightly does not mean that you can’t be nice for them to work for. People will always go the extra mile, both in pricing and in delivery of service, for those that they enjoy doing business with.
Want help improving your profits? FREE reports to help Small Business Owners stop falling for the myths and start understanding the real rules of profits. Download instantly for fast profit results! Kate Marsden is The Profit Mechanic and gives resources, tools and support to Small Business Owners to improve their profits. Read more about The Profit Mechanic here.
Article Submitted On: February 20, 2012