6 Ways Manufacturers Can Improve Supplier Relationships
Supply chain has been a thorn in the side of manufacturers for the better part of two years. Skyrocketing prices, delays, shortages, and myriad other mishaps within the supply chain are making it difficult for producers to get what they need and to stay on schedule with their own production operations. As they look for ways to get back on track despite supply chain woes, many manufacturers are leveraging positive supplier relationships to help create supply-side predictability, even during unpredictable times.
Why do supplier relationships matter?
Every good business relationship involves trust. In a buyer-supplier relationship, suppliers trust that buyers will pay on time and communicate needs consistently, whereas buyers trust that their suppliers will deliver on time and communicate any issues or updates in a timely fashion. In times of supply chain uncertainty, this trust becomes an asset for both parties.
The good news is that it costs virtually nothing to foster good supplier relationships, outside of what it costs to pay your invoices. A little effort goes a long way, and it starts by recognizing the give-and-take nature of the relationship.
Six ways to improve relationships
The best way to foster a good relationship is through open and honest communication. Communication is at the root of these six strategies, and it’s a fundamental part of securing the benefits that come with a strong supplier relationship. Here’s how to create trust that pays dividends with your suppliers:
- Pay your bills on time and in full. The fundamental nature of this relationship is a business one, which means money matters. Paying on time and in full sets the tone for trust and reliability — especially over time.
- Create standards and channels for communication. When you prioritize communication, suppliers feel like you’re doing your part to work with them. Set up quarterly check-ins or have designated points of contact that develop good rapport.
- Give them dedicated attention and develop rapport. Alongside designating a point of contact, be sure to loop suppliers in to make them feel like they’re a vital part of your supply chain. A sense of accountability can strengthen your relationship with them.
- Find opportunities to demonstrate trust and preference. Let suppliers know you value them. Don’t be shy about telling them why you chose to work with them, or even that you chose them over a competitor. These simple words of affirmation can strengthen your relationship. Actions can speak volumes as well. For example, paying an invoice early is another way to show that you value them.
- Integrate when possible. If you like a particular supplier and want to cultivate the relationship, do what you can to consolidate ordering to that supplier. You’ll spend more and enhance the relationship by aligning yourself with them.
- Update and maintain supplier agreements. Discussing supplier agreements and terms shouldn’t be uncomfortable. It should be an open, honest discussion and one that leaves both parties feeling good about the relationship now and in the future.
Relationship building yields results
The benefits of relationship building will manifest in major ways for manufacturers who take the time to cultivate trust. This trust can lead to better awareness about material shortages before they disrupt production, or expedited delivery to reward on-time payment. You also may experience preferential treatment when supplies are tight. It all comes back to trust. Suppliers want to work with customers they can trust, and manufacturers can position themselves to benefit by simply taking the time to communicate and earn that trust.