How a long-term supplier relationship can benefit your business.
Suppliers are no doubt crucial to your business. Have you considered how developing good supplier relationship management could be key to achieving better prices and better performance down the supply chain? Here are a few ways in which it can benefit your business to show loyalty and remain in good terms with your supplier.
- Pricing vs stability. Remaining with one supplier can mean that you accept a higher contract price but nurture a stable relationship. The other option is to seek out a lower price but risk of volatility by switching supplier. Consider however that a supplier with whom you have applied good supplier relationship management is likely to drop their prices to maintain the valuable relationship. Both parties stand to benefit from negotiations.
- Building efficiency. The better a supplier gets to know your business, the better knowledge they will have of your methods and in theory, the more efficient the transactions going forward. This also works the other way round. When both buyer and supplier understand each other’s business models, there is opportunity for consolidation and the ability to develop a more efficient and streamlined chain which reduces costs through economies of scale.
- Ongoing improvement strategy. Once you have built a relationship with your supplier, you can encourage them to continually improve their products and services. It is best to take an active approach to contractual performance in the form of KPIs, as the performance is then measurable and you can legitimately seek ongoing improvement. This is one of the significant ways in which supplier relationship management is very beneficial to the buyer.
Taking all this into consideration when choosing suppliers for your business may have you taking more time to make the decision that’s right for your business long term.
If you’re ready to take the next step in exploring the potential for your business? Then contact me and we can talk.
Paul Strachan M. 07793 447961 T. 01307 460667 E. firstname.lastname@example.org