Building Relationships with Suppliers

Howdy folks, another post and this time I want to deal with suppliers.

Much is written about building relationships with clients and customers but in my opinion not enough is said about the importance of relationships with suppliers. This surprises me because more often than not, your suppliers are propping up your business with their services and products. In many cases, businesses are selling on those services to others. If your relationship with a supplier breaks down it can lead to all sorts of problems.

I class suppliers into two categories – ‘essentials’ and ‘nice to haves’. An example of an ‘essential’ supplier for my business (web design) might be my Internet service provider or perhaps the company we use to run our customers online payment solutions. A ‘nice to have’ could be the water cooler company or coffee supplier. I focus primarily on essential suppliers in this post because they have the biggest effect on your business.

Some people try and drive cost down at every opportunity. In my opinion it’s important to pay the right price for goods and services. If you drive down a supplier to the point where there is no margin in a job for them they are less likely to provide as good a service to you as others might. Although you might get the satisfaction of knowing you’ve got their lowest cost, the knock on implications later may come back to haunt you. When you’re talking about a physical product, clearly it’s important to make sure you aren’t paying over the odds for it – if someone else provides the same product then shop around but be very careful to make sure you are getting like for like. This is even more true when it’s a service you’re buying – something intangible is far harder to judge on a like for like basis (this is a problem we suffer with in the web industry a lot). I have made a conscious decision as a business to make sure suppliers are paid on or as near to their terms as possible. If a supplier is in your ‘network sphere’, ie. they mix in the same business circles as you then be careful as word travels fast and you don’t want others not wishing to supply you due to your late payments or treatment of other suppliers.

If I can sum up my view on relationships with essential suppliers in one sentence it would be: “look after those that look after you”. I make it my business in these relationships to build up a rapport with as many members of staff through all areas of these supplier’s businesses. Make it your goal to know everyone from the person on first line support (these guys could become your most important friends in business) through to the management, through to accounts department. Let’s break that down a bit more:

Support Department - If you need help with the service or product you’re being supplied then you are probably going to talk to someone in the support department on the phone/email as the first port of call. Make it your business to show an interest in these people, find out about their personal lives/their interests etc…These are the guys that if something goes wrong, you want on your side. If this happens, then you want to know that these folk are going to look after you and prioritise you over perhaps other people suffering from the same issues. I want to know that if i need help I’m going to get it. Another thing I truly believe and recommend to any business owners out there is to reward these people when a good job is done and at certain times of the year (Christmas etc..). If they go out of their way to help you then make sure you thank them, even if it’s just a card or box of chocolates. We always send our main suppliers drinks and chocolates at Christmas and if they do a good job for us. Do you thank your suppliers enough?

Management - Sometimes you don’t get to meet your supplier’s management teams but where possible make it your business to do so. If you need something done at a high level then these are the people who will hopefully be able to make it happen for you. They are generally the guys that will be setting prices and deciding who to deal with and where their business is going – as a main supplier this all has a knock on effect on you and your business.

Accounts - The person that raises invoices to your company is well worth spending some time on. If you need a few extra days to pay you need to have a good relationship with this person/team. If you get on well with them they are more likely to be good to your business and let you have some leniency on payments. In my start-up days this was especially important.

OK, for fear of boring you too much, I’m keeping my ‘Banksy’s top tips’ short and sweet on this one:

1). Find out the first names of your suppliers and use them where possible in conversation (works well on the phone)
2). People will move jobs so make sure you try and get to know as many people doing the same job as possible
3). Don’t drive price down so much your suppliers can’t give you their complete attention
4). Pay your suppliers regularly and preferably before they have to chase you for payment
5). Send suppliers gifts at key times of the year and when they go beyond the call of duty for you

As a small business owner, think carefully about how you treat your suppliers because you never know when you’ll need them…oh and if I ever become a supplier to you then please treat me well too :)

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Comments

  1. I agree very strongly that the supplier relationships are important, and should be nurtured.

    For most businesses there are two or three ‘essential’ suppliers as you put it, that you really can’t do without, or that would be incredibly painful to replace. In this group there are also suppliers that if they do their job right can slicken your operation and service to customers. These are the ones you really need to work with.

    Sharing problems with these suppliers can be incredibly powerful, as you find joined up solutions and normally win-wins. It’s in their interests to help you stay in business after all.

    For me, there is a very important top tip not yet covered: Share the pain in the difficult times, and share the gains in the good times. Don’t see key supplier relationships as one way.

    Stew

  2. Thanks Stew,

    Great feedback and totally agree re@ Harder Times. Looking back, i’ve definately shared the pain with my suppliers and it helps hugely.

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