Supplier Relationship Management is, fundamentally, all about valuing your relationships and managing them effectively.
All too often businesses think they’re doing a great job at this – but gifting out corporate hospitality tickets and crates of wine at Christmas is really not a good idea and is something I would actively discourage!
It’s critical to remember that managing a supplier’s performance and relationship requires a similar skill set to managing internal employees – even if the tools that you need to do it are a little different, as are the support services.
But fundamentally, why would you not do it? The consequences of not managing your own personnel are pretty obvious, so what do you think will happen when you do not manage your key suppliers?
Sadly, I see the same disappointing consequences all too often:
- Performance deterioration.
- The expertise you thought you were getting seems not to exist.
- You do not know who to call when things go badly wrong.
- The solution is not working in your business.
- Flexibility has gone out the window.
Think about this; rather than the old bottle of wine and hospitality at Christmas, imagine instead if you were jointly attending an annual dinner with a supplier to collect awards for the collaborative work and outstanding results that you have jointly achieved, for example.
This is critical because it taps into something fundamental: we all love to be valued. How would your suppliers respond if you upped your game in this space? Try it and see!
Simple Steps to Managing a Supplier Effectively
This might all sound great, but how might you go about managing a supplier effectively in practice? Here’s some simple steps to think about on your journey:
Step 1: Prioritise. These techniques should work with all suppliers, but you should focus on those with higher spend or higher criticality to your business.
Step 2: Prepare. Read the contract. Let me emphasise that again…read the contract! Find it first if you must. Pay close attention to it, and keep an eagle eye out for negotiation levers. These will commonly include:
- contract term
- termination rights
- frequency of reviews
- continuous improvement
and so on.
Step 3: Engage with your stakeholders. Identify your stakeholders. Collate their feedback on the supplier in a constructive manner. Then, invite the supplier to do the same. The next step is to then consolidate your internal and supplier findings and review them appropriately; you might be surprised at what you find.
Step 4: Meet the supplier. Open the meeting with gratitude, and a statement about the constructive purpose of the review you’re about to undertake. Remember to document the meeting thoroughly, especially any actions and owners that are relevant.
Step 5: Repeat! It’s a relationship: it needs ongoing work. Maintain the same structure and repeat at least annually.
I’m keen to hear about any methods you use to manage suppliers…let me know below!