Are you making the best of your supplier relationships? If not, it’s never too late to start!
“Supplier relationship management (SRM) is one area all businesses need to become good at because it can have significant effects.” – Greenlight
Despite what some believe, good SRM is not always about getting the best bang for your buck. You have to show that you mean business and come across as someone suppliers want to work with. You also have to be loyal and transparent.
Here are some ways to negotiate better and get the most out of your suppliers.
Let New Suppliers Know You Mean Business
New suppliers just want to know that you’re not wasting their time. Sell yourself to your supplier as someone who is likely to do repeat business.
“The trick is to portray confidence. You don’t have to lie, but it doesn’t hurt to project an image of being slightly bigger than you are.” – Ecwid
When you are upfront about the type of business you can provide, suppliers are more likely to listen and want to work with you. Good supplier relationships are about investing in the long term, so let them know you’re serious about doing business!
Negotiate On Things Other Than Price
Sometimes you just can’t get your supplier to budge when it comes to price. In this case, try negotiating on other things that can help you lower your budget.
“For example, you can negotiate to reduce the amount of your down payment, for a discount when you purchase in bulk, for faster shipping without additional expense to you, or for improvements to the warranty, such as its length or comprehensiveness.” – Quick Books
Saving on non-material items will add up to reduced overhead. At the end of the day, they’re still a win for your business!
Don’t Forget To Shop Around
Shopping around is an essential part of the supplier selection process. Information is leverage when it comes to choosing the best supplier.
“Your choice will depend on a wide range of factors such as value for money, quality, reliability, and service. How you weigh up the importance of these different factors will be based on your business’ priorities and strategy.” – Info Entrepreneurs
It’s important that you know your industry and your suppliers inside-out. Consider multiple suppliers as a way to find the one that best fits your needs.
Consider Going All-In On Key Suppliers
Once you shop around and find a supplier that works well, consider giving them all your business in that particular category.
“If you have a large number of suppliers, separate them into groups based on how critical they are. You can then evaluate them according to the effect they have on your product or service in order of importance.” – CIPS
Choose the best supplier in each category and consider going all-in with them. This means, giving them all your business as long as they are able to maintain quality standards.
While there are always risks to putting all your eggs in one basket, it can be an effective way to build good supplier relationships. It shows suppliers that you are serious about working with them.
Be Honest & Build Trust
The first time you work with a supplier is about building trust. A lack of trust is one of the most common reasons why supplier relationships go south.
“Buyers must seek to engage their suppliers, just as one would internal employees, and ensure that they are emotionally as well as financially invested in the success of the relationship.” – Forbes
It’s important to foster good relationships with suppliers. Over time, they will lead to trust and accountability – two things that can never be bought!
If you have questions or would like more information, I’d be happy to help. Please send an email, and my team will get in touch with you!