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Brick No15: Treat your suppliers the way you would treat your customers (Part 2)
By Matt Weston, Friday 7 November 2003 Today's 8-point action plan will help you build strong relationships with your suppliers In Tuesday's brick, I extolled the many virtues of treating your suppliers the way you would treat your customers. Wave goodbye to the old 'treat 'em mean' school of supplier management. The unarguable truth is that the closer you get to your suppliers, and the stronger the relationships you build with them, the better your chance of business success. Today, as promised, here's my 8-point action plan, to help you put this approach into practice with your small business – (1) Pay promptly If your supplier can expect your payment on time, in line with your payment terms, it is easier for them to plan their business. Show an appreciation of your supplier's time and effort and awareness of their own cash-flow by paying promptly. A business owner I know used his record of prompt payment to broker a discount with a printer, with whom he'd had a long-standing relationship. The printer had upfront raw materials costs to meet, so was willing to offer a 3% discount as a reward for payment within 7 days of the job being complete. (2) Be honest and open if you have a problem At the same time, let's be realistic. As a small business, there will be times when you do get into difficulties with your cash-flow, and might not be able to settle your bills as quickly as normal. After all cash-flow problems are cited as the most common reason for business failure. But rather than using the old school approach and trying to hide away the problem, you should be open and upfront. Because you've already fostered a close relationship with your suppliers, they'll be much more likely to understand the situation and want to help than if you pretend the problem isn't there. After all, the last thing your supplier wants if for you to go out of business. Explain the situation and work out a realistic way and timescale for settling the bill. Make sure you can stick to it. (3) Always reward good performance It's simple – if you show that you recognise and appreciate good performance, it's more likely that your supplier will bend over backwards to keep delivering the results. The reward or incentive can be as simple as a thank you email (copying in all staff involved), a thank you card, or finding out your contact's tipple of choice and sending them a bottle of it. My dad, who ran his own firm of solicitors, used to receive dozens of bottles of whiskey at Christmas from loyal clients – they made the effort to find out what he liked to drink and sent a bottle as a thank you for his efforts over the year. At the very least, always make a point of picking up the phone to say thank you when a supplier delivers on time, they will remember it. (4) Ask for specific, honest feedback Ask your suppliers to be open with you. Regularly ask your suppliers these sorts of questions – – What 3 things irritate you about our practices? – How could we change our practices to make your life easier? – What works well for your other customers? Keep close to your suppliers, and always encourage open, honest feedback that will help you take the relationship forward. If your suppliers feel that you are receptive to their input and suggestions, it's likely that they, in turn, will be more receptive to your comments and feedback. In any event, if your feedback highlights problems, tackle them together – as a team, supplier and customer. (5) The deeper the relationship the better Build deep relationships with your suppliers and you will inspire goodwill, loyalty and trust. This works on two levels – First, build multiple relationships and get to know all the different people involved with your account. This might include the receptionist, an account manager, the CEO, the bookkeeper. The more people with whom you have a first name relationship, the higher up the queue of priorities your business will climb. Second, make every relationship a personal one, not just a formal, skin-deep one. Know your contact's partner's name, where they go on holiday, what they like to do at weekends. The more you know your contact the deeper and stronger your relationship will be. (6) Spend time at your supplier's premises There's no better way to communicate your interest in your supplier's business than spending some time there. Get involved in the issues facing your supplier, show that you care about their future success. Talk about wider business issues, not just your relationship. You might be able to share some contacts or knowledge that would help them to improve. After all, you're closer to the end customer – you might be able to highlight a new opportunity that they can take advantage of. (7) Invite your suppliers to your company celebrations A Christmas party invite is a great way to show your appreciation and to get your supplier involved in your business. And when you have company celebrations (eg for new employees, new products, new premises) why not invite your key suppliers along to get them involved? Go further. Host a once yearly get-together, just for you and your key suppliers, to show that you value suppliers as stakeholders, almost as part of your business itself. It's also a great opportunity for your suppliers to share contacts, ideas and knowledge amongst each other. The more you can get your suppliers involved in your business goals, the closer and tighter your relationship will be. (8) Consider making a long-term commitment If you're happy with your suppliers, and they're happy with you, why not make a long-term commitment to them? It’s a strategy that allows both of you to plan ahead, and can help drive down your costs. A web development company I worked with closely was able to take on an extra member of staff because we made a long-term commitment to use their services. Instead of paying by the job, we committed to a minimum of work for the year to come. In return they were able to pass on cost savings to us, and prioritise and plan for our work. Remember to sign up: back to top |
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