4 Ways to Improve Supplier Relationship Management

No matter the industry we find ourselves in, supplier relationship management should always be at the top of our priority list. It used to be simple, we needed to choose suppliers that are the most cost- efficient and easy to work with. That used to be enough to maximize the returns of a business relationship. Since those days, it has become more complicated. With the boom in technology, the advent of the Internet and the globalized economy, supplier management has gone through a big transition as of late. We are spoiled for choice when it comes to suppliers, but it is still hard to choose the ones best suited for us. Luckily for us, there are plenty of strategies for us to use in order to streamline our supplier management system. In this article, we will cover the most important ones that we can implement quickly and for the greatest effect.

1.The definition

As businesses have evolved in all of their aspects, effective supplier management has quickly been recognized as one of the most essential problems to tackle. Supplier relationship management can be characterized as systematic management of post-contract value from said relationships. Leaders of this field are in charge of systematically retaining and innovating on value extracted from working with relevant suppliers. Buyers need to proactively strive towards the integration of supplier’s processes into their own and their customer’s. This way, waste and overhead are minimized, thus maximizing profits for everyone.

2.Communication

Communication is key in today’s turbulent business environment. Keeping our channels open and robust is essential in keeping us on the same page with our suppliers. Conflicts and misunderstandings can quickly be resolved, provided all parties are inclined to give honest and constructive feedback. We can take it a step further by adopting transparency in each other’s operations and thus nurture understanding and partnership. To keep conversations professional and productive, there has to be a common goal in sight and that is efficiency, authenticity and long-lasting relationships. Everyone is busy in their own work and our communication needs to be short and to the point, without unnecessary distractions.

3.Contractual agreements

Best relationships are forged in legally-binding contracts. These ensure all parties involved that no one is going to be left wanting at the end of the process. It takes a certain degree of trust before making such a contract, further strengthening it even further. We need to make sure that we and our suppliers are in complete agreement on a transparent contract. This contract needs to have its terms, conditions and responsibilities clearly defined for everyone to see, understand and sign on. All of the clauses and conditions should be challenged freely and without fear of the relationship deterioration. In fact, it is exactly the time for negotiating, before the signatures are drawn. Negotiations are excellent opportunities to manage expectations and align objectives with the future in mind for all parties involved in the contract. Making legally binding contracts require an impartial third party with a legal licence. These organizations like the David Kam & Co Solicitors, for example, will not only make the contract viable but will guide us through the process while having everyone’s interests in mind.

4.Price and value

Quality service and products require an adequate price for us to pay. If we are fortunate enough to have financial flexibility, we should use and capitalize on it. Buying in bulk will almost always get us a better deal. Paying in advance is also a good way of optimizing our price-per-unit number. If a supplier offers us better service for a little more compensation, it is often worth the price increase.

Relationship between a business and their supplier is not to be underestimated. Buyers and suppliers will often face difficult choices on how to conduct business while nurturing a mutually beneficial relationship. A solid strategy prior to entering such a partnership is needed. Building and managing relationships require active and proactive participation by all parties involved. The focus is shifting on the total business relationship value, rather than individual aspects of the exchange. That said, it is also important for all parties to preserve their identities and independence.