5 Suppliers Who Can Make Your Day: How to Build Better Supplier Relationships
Supplier relationship management (SRM) is the practice of managing your relationships with suppliers to maximize efficiency, reduce risk, and optimize profitability.This article will teach you all about the different types of SRM and how to put them into practice in your own business.
1) On-time Deliveries;
Good suppliers offer on-time deliveries, product that matches specifications and good service. If you’re constantly receiving deliveries later than expected or if you notice discrepancies in what’s being shipped and what you ordered, it might be time to consider switching suppliers. No matter how great your supplier is at taking care of your customers—which should be a priority for any supplier relationship management program—they won’t deliver on their promise if they can’t meet their delivery date. That hurts your business and can significantly impact your reputation with both existing and new customers. While most businesses know about delivery issues, many fail to understand just how much those late shipments are costing them. A few extra dollars here and there may not seem like much, but add up all those extra costs over several months and you could end up paying thousands more than necessary. And as long as there are late shipments happening every month, customer satisfaction will also suffer – which could mean lost sales. To ensure your business doesn’t fall victim to poor supplier relationships, regularly monitor order status reports so you can get early warning signs of problems before they happen. This will help keep any supply chain disruptions from derailing customer orders while also helping identify problem areas in your procurement process that need attention so things don’t get out of hand again down the road.
2) Considerate Communication;
The types of supplier relationships you have will help dictate your business’s strategic goals and may even have an impact on your company’s bottom line. Take a look at these different scenarios that illustrate how we can utilize supplier relationship management (SRM) techniques in order to better communicate with our suppliers: proactive communication, collaborative development, open & honest feedback. There is more than one way to communicate with your suppliers; by understanding what type of relationship you want to build, you can craft your communication style accordingly. For example, what if a certain supplier is late on deliveries? You’ll want to approach them in a completely different manner than another supplier who meets their deadlines consistently. During each interaction, make sure you’re being considerate.
3) Flexible Procurement Terms;
In vendor relationship management, sometimes you need more than a supplier. You need someone you can trust completely and who’s willing to do business your way. Flexible procurement terms are an effective way of building longer-term relationships with key suppliers that can potentially drive both savings and service levels. If a supplier is willing to work with you on those terms, consider asking for something else in return—another of their products or additional support that comes with a price tag but is worth it for your unique needs. Not every vendor will agree, but many will if they see your long-term partnership as valuable.
4) Customization Options;
There are 4 types of supplier relationship management. Identify at least three of these 4 types and explain why these are important for companies. (Remember, there may be more than one type you could choose).
##1) Tiered Supplier Relationship Management – This type of supplier relationship management allows a company to have different levels in its supply chain. For example, one tier might be higher quality suppliers that produce goods that can’t be purchased elsewhere. Another tier might include lower-cost providers who specialize in producing large quantities of a product that is needed in mass quantities, but not on a daily basis (like fasteners).
##2) Ad hoc Supply Management – In many ways, ad hoc supply management is similar to tiered supplier relationships; however, with ad hoc SRM it is difficult or impossible for suppliers to make repeat sales as they don’t have any long-term contracts with clients.
5) Standing Out From the Crowd;
When a customer asks for your business, you’re flattered. You want to build a relationship with that person and keep them coming back for more—and you want to keep their colleagues doing business with you as well. One of your best weapons in these circumstances is vendor relationship management (VRM). Good VRM helps assure buyers that they’re getting a high-quality product while assuring sellers that they have an opportunity to stand out from the crowd. Follow these tips on how supplier relationship management can help build better relationships between your company and its vendors.