Financial Data
Updated 29 Feb 2020

How to keep your suppliers close

Suppliers are often seen as being at the bottom of the food chain. After all, you pay them, so if you say "jump", they should be doing cartwheels, right? Wrong.

02 April 2012  Share  0 comments  Print

All the answers to your unique business lifestage questions

The truth is that suppliers can do far more than just give you the products or services you need to do business.

Suppliers can be valuable sources of information on new products, what your competitors are up to, and new opportunities. They can also help you to cut costs, improve product designs and even fund new marketing efforts.

If yours is a business that relies heavily on outsourced commodities, your goal should be to build up good relationships with a network of suppliers who give you the right products, at the right time and for the right price.

How many is enough?

Having too many suppliers creates unnecessary administrative work for you and makes it hard to control costs. Too few, however, puts you at risk if one of them fails to deliver.

Generally, it makes business sense to limit the number of vendors on your books. This allows you to develop better relationships with each of them, manage them more easily, and negotiate better discounts and/or payment terms.

Take a fresh look at your current suppliers. How are they adding value to your business?

How do they measure up in terms of price, reliability, stability, location and competency? If they don't, it is time to review each relationship and either negotiate a new deal, or find a replacement.

Turn your dealings with vendors from mediocre to magical by following these three tips:

  1. Ask for discounts: Businesses that sell to other businesses often have a range of cost options, offering discounts of as much as 50% or more depending on quantities purchased, terms, length of the relationship, and other considerations. This could also include discounts for early payment. Ask your supplier what you can do to secure better pricing.
  2. Improve service. If you're having a service related problem, say something. Move up the chain of command until you get a satisfactory response. Clarify your concerns and give your supplier a chance to remedy the situation.
  3. Encourage a closer working relationship: You don't need to live in each other's pockets, but if you want suppliers to work more closely with you to improve quality and trim costs, let them know.

Two ways to get better service

  1. Stay in touch: Make personal contact with the person who manages your account. Getting to know them will help you to understand how they work.
  2. Be prompt: Place your orders as early as possible. And pay on time. This will make your business more valuable to your supplier and will stand you in good stead when you ask for fast turnaround or a special discount.
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