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Managing supplier relationships

Take a look at our top tips for managing supplier relationships

How do you manage supplier relationships?

Having a good supplier relationship will often lead to more generous terms and long-term relationships. It’s important to manage supplier relationships well, right from the bidding stage. Unhappy suppliers can pose an incredible amount of risk on your organisation and could lead to them breaching the contract. Here are seven top tips to manage supplier relationships.

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1. Consistent communication

Ensuring there is consistent communication right from the start of supplier selection is key to maintain a good relationship. Even if your supplier is located abroad, ensure that you have channels set up that will help you engage effectively. Make sure they’re not just communicating when things go wrong or when you’re making demands, as this could unsettle the supplier and place an increasing amount of pressure on them.

2. Follow a process

Implementing a formal process from the start will create a defined organisation process. This will help the suppliers to trust in the partnership and helps to foster best practices and for them to hit the ground running.

3. Evaluate the risks

Make sure that during the supplier selection you have a good idea of the risks that may occur when dealing with that supplier. Get to know their expertise, previous work and ask for references. By doing this, you’ll help to play for any unexpected results and know what to look out for if you feel there are issues coming up.

4. Be mindful of cultural differences

As more organisations are opting to source their goods and services globally, you’ll come across a wide variety of different cultures. It’s a good idea to research your supplier’s location and culture to help you build up a good rapport, as well as knowing if there are any religious events coming up, that may mean they will not be operating.

5. Set clear and achievable goals

In the initial agreement, it’s important to set goals and objectives that are achievable and understood by all parties. Any late demands may cause friction in the relationship, so ensure there are some terms and conditions and contingencies in place in the initial contract.

6. Address suppliers’ concerns

Take the time and effort to understand suppliers as this will help them address any potential concerns they may have. You should instil transparency throughout the full process, to make supplier’s feel comfortable with raising concerns. This will prove to be a huge benefit in helping to mitigate potential risks and will motivate the supplier.

7. Monitor their performance

Don’t just communicate with your supplier when things go wrong. Make sure to let them know the things they are doing right by regularly monitoring their performance. Have monthly check-ins and positively praise them for the good work they’re doing. If they have goals to meet, this can help motivate them to do better which will increase productivity.

 

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