How To Get The Best Value From Your Vendors
It’s been said that operating a business would be easy if it weren’t for employees, customers and vendors. The accompanying resource won’t solve all your problems, but it may solve one-third of them — and that’s not a bad start.
Whether you’re a small retailer or distributor business trying to forge better supplier relationships, or a Fortune 500 chain with complex order fulfillment (OT-IF) and vendor compliance requirements, this resource will give you important and specific tips for building a profitable relationship based on good business practices.
Just as your suppliers want to become highly rated vendors to your organization, the reverse is true as well – you want to become the favored relationship, as opposed to those who beat up their suppliers for every last advantage. Although you may not think about it this way, having a tremendous supplier base is indeed an important competitive advantage. Companies with great vendors get the best pricing deals, the best regular service, the best emergency service — as well as getting favorable treatment when it comes to new product introductions, and stock allocation incentives. These advantages enable you to increase profit margins; amaze customers with depth of stock; and be the first to introduce new products to your customers. All this, in turn, leads to greatly enhanced customer loyalty, positive online reviews and sales leads.
Companies of all sizes sometimes fall into easy-to-avoid traps that undermine vendor relationships. The resource will help prevent this from happening. Situations that erode vendor relationships include not paying enough attention to day-to-day interaction or paying too much attention, which can smother vendors, bringing out their worst instead of their best.
In the frequent situation where the customer is the larger company having asymmetrical
clout and operational sophistication, the buyer needs to invest more in supplier education and provide easier online tools (vendor portals) that streamline the day-to-day relationship. Two other common problems that involve going to extremes: negotiating too hard for a price or other terms can be damaging, and being overly aggressive with vendor compliance fees and chargebacks that only weaken the vendor base. Vendors are not inspired to work with you for the long term or provide their best products and services if they are only breaking even or losing money from after-the-fact deductions.
If your business has complicated order fulfillment and vendor compliance rules, it may be a good idea (mentioned at the end of the resource) to suggest to your strategic vendors to utilize a compliance management service or strengthen their accounts receivable deduction automation to resolve problems quickly and uncover the root causes of the chronic money costing mistakes. This is a rather important idea that helps vendors perform better to help you, while helping vendors improve their ability to serve you – and being open to their ideas enhancing your business — go a long way toward establishing a true partnership spirit that is the core of all vendor relations.
For more vendor relationship insights, please check out the infographic below. Courtesy of Smyyth.
