The customer is king, of course. That’s because nothing good happens for your company unless and until a sale is made. And that’s why most of the attention in this space directed at the buyer/seller relationship has focused on your role as a seller.
But consider the other side of the coin. Your relationships with the people who sell to your company – your business suppliers or vendors –are critical to the long-term success of your firm.
You need good business suppliers, so don’t take them for granted.
So how should you relate to them? Well, the old “do unto others…” is always a safe bet. But here are four specific recommendations that can take your supplier relations to a higher level.
Communicate
Often. Clearly. And not just when there’s a problem.
The more your key vendors and suppliers know about your operations, the more likely it is they can suggest ways to help you.
Let them know what’s happening at your company. Keep them up to speed on new product or service roll-outs (or discontinuations), personnel changes, and even – if there’s no chance the information could be used by a competitor – your long-term plans for the business.
There’s even the possibility, too, that once your vendors have a good understanding of your company’s offerings, they can refer potential customers to you.
Be Loyal
You owe it to yourself, your employees, your investors, and even to you customers, to keep a close eye on the bottom line. On the other hand, don’t ditch a competent, effective vendor over a few cents on the dollar.
Not only is this kind of action petty, but it has real potential of coming back to haunt you. What you save dollar-wise in the near-term might be eventually given back in the logistical adjustments you have to make to accommodate a new business supplier, miscommunication, and general confusion.
Make sure you’re being treated fairly in terms of pricing and service, and then forget it. Don’t lose sleep over the couple bucks you might save by doing business elsewhere.
Tip: On the other hand, stuff happens. In case your supplier has a labor strike, stops offering the material or services you need, or even goes out of business, make sure you have a backup plan.
Pay on Time
Looks like we’re back to “do unto others…” But, seriously, do everything you can to make sure your payments arrive when expected. (You don’t need to pay early;in fact, you shouldn’t, with respect to effective cash flow management.)
A couple specific points here:
· Negotiate the best payment terms possible upfront. After the order is placed and your vendor fills it, it’s too late.
· If you must be late, call the vendor immediately and explain why.
· Pay small, local vendors first. They probably need the cash flow, and will be more likely to help you out in a crisis if they know you’re a reliable customer.
Provide Reasonable Lead Times
You should make an effort to give your vendors as much lead time as possible on your orders. This ensures that products that meet your standards will be delivered at the appropriate times.
Unless there are genuine competitive reasons not to, share with them an honest projection of your needs and let them know about significant alterations in your estimates.
Tip: Visit your key suppliers’ offices, factories, or warehouses. Being knowledgeable about your suppliers’ production methods and needs will help you make realistic requests in terms of volume, timing, and servicing.
MP Star Financial can offer solutions to you cash flow management problems. Call for more information. (800) 833-3765, extension 150.
Image courtesy FEMA / Wiki Commons