Strong, lasting partnerships with suppliers are essential for the operation of every company. The consistent supply of their goods and services ensures you can run your business successfully. Vendor negotiations are an important part of day-to-day activities and facilitate process management across the entire chain. Naturally, companies face a lot of administration and marketing challenges, but the timely resolution of all payment, procurement and order issues has a direct effect on your overall sales effectiveness.
To help companies better manage their relationships with distributors, we have identified five things that will send your suppliers running for the hills and targeted areas for improvement, so you can focus on cultivating lasting partnerships that create value for your business.
1. Treating your supplier as a customer
Companies often mistake their distributors for clients, which leads to a shift of power in the working relationship. You need to remember that a supplier is more of a channel partner, whose role is to meet the needs and requirements of your customers with regards to the products and services you offer. Ultimately, the supplier is only interested in hitting sales targets rather than the function and attributes of your business as a whole.
2. Not keeping written records of all negotiations
Even with those supplier negotiations with whom you feel most comfortable, it would be a major mistake not to put down in writing everything you have agreed on. Companies often work on multiple procurement contracts at a time and cannot be expected to remember what was discussed days or weeks back with certain manufacturers. What’s even more, insisting on the delivery of goods or services that are not in your contract makes you look unprofessional and will most likely lead to the termination of a working relationship with a supplier. Additionally, all written contracts should be evaluated by attorneys of both parties to ensure all provisions are laid out in a manner that is clear and aligns with regulatory requirements.
3. Frequent and unannounced factory visits
It’s entirely understandable that [successful] procurement managers want to stay on top of supplier negotiations and all related activities, but they need to remember that they are separate entities that have their individual day-to-day operations and targets to meet. Making unexpected visits to your distributor’s factory or warehouse is the easiest way to make them reconsider the working arrangements you have in place, and even terminate those contracts.
4. Signing off on materials/services that have not been inspected and approved
Time is one of the most valuable commodities that businesses have and no one tolerates having theirs wasted. As the ordering party, all responsibility for checking materials upon receiving them lies with you. This duty includes reporting all substandard components. Calling at a later date to complain about the quality of goods or services you have already signed off on is a clear mark that you don’t value your supplier’s time or production process. To expect for them to follow through on all agreed terms, you need to reciprocate with the same courtesy and raise concerns related to product or service quality within the designated timeframe for making a claim as agreed upon in your contract.
5. Misinterpreting your standing arrangements
Companies should be very clear in what they expect of their suppliers as there is a substantial difference between taking orders and selling. It is not uncommon for manufacturers to think their distributors would be open to selling the end product/service merely because they’re familiar with it and have a network of existing customers. But as independent businesses, suppliers have a high degree of autonomy that allows them to focus on your products to the extent that the process of supply is properly aligned and focused on your process of manufacture - nothing more and nothing less.
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