Last modified: September 28, 2016
You know the importance of finding the best suppliers and supply chain solutions when running a products-based organization, and that it was rather hard to source them. When it comes to raw material and product partners that supply necessary goods, you also know they must be monitored to ensure they can deliver goods as agreed and on-time.
Keep the following five strategies in mind when working with your suppliers:
Informal conversations with suppliers are common and some suppliers over-promise all sorts of nice terms, verbally. However, be certain to get all your agreements in writing and thereby avoid the oft too common scenario of a supplier who promises the moon then conveniently forgets those terms during crunch time.
Outline what your supplier expects from you and what you expect from them for your supply chain solutions (and that they’ve agreed upon). Then ask their representative to sign it and then countersign the documents. Don’t ever rely on your supplier to draft the agreement or NDA.
Much of the misunderstandings in business are due to a breakdown in effective communication. Don’t expect a supplier to read your mind or to understand your business from the onset. It is your job to see through to achieving your desired supply chain solutions. It’s your responsibility to clearly outline what you expect in exchange for payment. So, if a supplier is continually not meeting your expectations – and you’ve identified that upfront – it’s much easier to move your business to partners who can. Collaboration is key when working with suppliers, so also think about setting up a supplier day to get that communication process started.
One way you can help your new partners, and see through to the success of your supply chain solutions, is to share a quarterly forecast of the anticipated volume you intend to bring them. Be conservative in your estimates and base them on historical sales data – ideally the same period versus year ago.
Sharing data will put your supplier in a better position to help you meet your business need and cut down on elongated lead times.
It’s an exception to have only one supplier as it is rarely feasible. Diversification is wise because supplier greed or emergencies do happen at times. To reduce your risks, have options outlined and in writing to reduce the volatility of your pricing (increasing without notice). You’ll also circumvent issues with quality assurance or lagging lead times. If you have an excellent relationship with your current supplier –keep it going! Yet always have another on-call supplier to provide your firm a safety net. After all, to succeed in achieving your desired supply chain solutions you’ll need consistent supply. Risk mitigation is a BIG deal in the supply chain, and not just for disasters, but also when daily suppliers situations go awry.
Relying on one sole source is risky business. If a supplier is simply not delivering (in more ways than one), start allocating a percentage of your purchases to a new supplier. Spreading your risk will allow you the necessary consistently and peace of mind.
Why is accountability so important? “Because accountability is what gets things done. Without it, things just don’t happen,” according to entrepreneur Danielle Zack.
Your units should be ready when your supplier agreed. Not late. When you pay an invoice on time, your suppliers’ obligation is to be responsible and transparent as well in your relationship with them.
A sign of a good supplier is the ability to trust in the small things, which will lead to your confidence to increase your ordered volume. As an extension of your team, good suppliers are key to meeting your supply chain solutions and achievements. Set the same expectations for suppliers as you do for the rest of your team.
Adam Robinson, Marketing Manager at Cerasis provided this guest post, which originally appeared here on the Cerasis blog.
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