Aug 7, A good relationship with your suppliers is just as important. In fact, it is so crucial not having one can make running your business similar to. A Study of Relationship between Customer and Supplier in Cutlery Outsourcing Doing Less: An Analysis of Outsourcing and its Effects on Firm Performance. Since suppliers provide the essential goods and services to run a business, owners should focus on what they bring to an operation instead of what they cost.
Potential Drawbacks of Supplier Partnerships Establishing close relationships with suppliers, though, means that buyers have to conduct the necessary research to make sure that they select the right companies. Today's emphasis on partnerships is contingent on suppliers who can become part of a whole supply system. In fact, major suppliers need to be critically screened and evaluated before they are brought into any supply chain system.
Thriving small-and mid-sized businesses that are already well-established will be better able to take on such tasks than will fledgling businesses, but even start-ups should take the time to learn more about their suppliers than their prices. Of course, desired supplier traits vary somewhat depending on who is being surveyed. For example, design engineers tend to place the most weight on product quality when analyzing suppliers, while purchasing professionals place greater importance on cost considerations in conjunction with product quality.
Criteria to be evaluated will also vary depending on product category. The objective of all evaluations is the same: To compare all potential suppliers in a market segment to determine the one best qualified partner with whom to work. The evaluation of potential suppliers should include an assessment about whether the supplier is suited to assist the purchaser to meet its prime business objectives.
Typical the objectives to which the supplier should provide assistance include inventory reduction, quality improvement, elimination of paperwork, and improved handling of incoming goods. Poor supplier performance is not the only risk a purchaser faces in situations where it has linked with a bad supplier.
Another potential threat that arises when partnering with suppliers is the loss of trade secrets to competitors. Additionally, a supplier may venture out on its own once it has acquired new abilities and may in fact become a competitor. A company that abdicates too much to its suppliers may weaken itself.
All of these risks are especially great in fast-moving, knowledge-intensive industries, which are precisely those for which integrated supply chains may be of particular usefulness. Given these potential pitfalls, businesses seeking to establish partnerships with suppliers are urged to proceed with caution. Commitment to quality—Not surprisingly, product quality is regarded as an essential factor in selecting a supplier. Specifics in this realm include the suppliers' statistical process control methods, its QS registration, its approaches to problem solving and preventive maintenance, and its methods of equipment calibration.
Cost-competitive—Competitive pricing is another huge factor, especially for businesses that are smaller or experiencing financial difficulties. Communication—Suppliers that do not maintain a policy of open communication—or even worse, actively practice deception—should be avoided at all costs. The frustrations of dealing with such companies can sometimes assume debilitating dimensions.
Moreover, constant exposure to such tactics can have a corrosive effect on internal staff. Timely Service—Businesses' strategies are predicated on schedules, which in turn are based on receiving shipments at agreed-upon times. When those shipments slip, business strategies suffer.
The blow can be particularly severe if the supplier is negligent or late in reporting the problem. Flexibility and Special Services—Many purchasers express appreciation for suppliers that take extra measures to satisfy their customers.
These "perks" can range from after-hours accessibility to training or inventory support. Market Knowledge—Suppliers with extensive knowledge of market conditions and mastery of contemporary issues impacting your business can be immensely valuable in helping small companies chart a course to sustained financial success. Production Capabilities—the supplier's capacity for program management and production should be considered, including its ability to integrate design and manufacturing functions, its approach to design changes, and its program measurement features.
Financial Stability—Businesses that allocate large sums for purchasing materials often prefer to make long-term deals with suppliers that are financially stable. Such arrangements not only convey security, but they allow companies to learn about one another and gain a fuller understanding of each business's needs, desires, operating practices, and future objectives.
Inventory—Evaluation of this consideration is dependent somewhat on the supplier's business.
If the supplier is a distributor, the emphasis will be on how well his inventory is set up to avoid stockouts. With a manufacturer, emphasis has to be on inventory accessibility. If the supplier has a just-in-time program with hour assured delivery, it's in better condition than the manufacturer with a lot of raw material inventory and an eight-week lead-time for raw material.
Maintaining good relations with your suppliers - Business Tasmania
Ability to Provide Technical Assistance—Suppliers with top research and development capacities can be quite valuable to buyers, providing them with significant savings in both price and quality.
As one purchasing executive admitted to Purchasing, "In new technology areas we have great difficulty getting the users in our own company to define what they want. Most have an attitude of 'I'll know it when I see it.
Suppliers can be advocates for your business; their industry contacts might in fact become your clients in the future. Make their job easier. Give your suppliers adequate lead time and communicate your needs on an ongoing basis. Crises can't always be averted, but if you're the client who repeatedly calls suppliers with last-minute jobs, they won't be happy.
Don't expect your suppliers always to anticipate your needs. What you request might be distinct enough to require more time, or what you want might not even be clear.
How to Establish a Good Relationship With Suppliers
Work with suppliers if they need to puzzle through what it is you need. Share information about your business. Keep suppliers in the loop about changes in key staff, new product lines and special promotions.
This lets suppliers know you value the relationship.
It also provides them the opportunity to market more of their services to you if they spot an additional service they can offer. Also, if you let them know you're running a promotion that could increase the volume of sales, they can be better prepared to fulfill an order which is larger than normal.