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Supplier Relationships

Whether your business is service or product based, you will almost certainly have suppliers that you count on as part of the process of delivering your value proposition to your customers. If neglected, your relationships with your suppliers can be a source of extreme frustration, and can leave you unable to deliver value on time, in full, or as promised. Properly tended, your relationships with your suppliers can actually strengthen your value proposition, and become a source of competitive advantage.

Your supplier relationships are foundational to your business. Without them, you would not be able to survive. The following list are general guidelines for building and maintaining those relationships.

  1. Partner up. Focus not only on what your suppliers can do for you, but also on what you can do with your suppliers that may help to lower costs.

  2. Visit your important suppliers regularly. There is no replacement for meeting with suppliers face to face. Relationships are built and strengthened through this type of conscious commitment. As you get to know your suppliers and their capabilities, better, you will find ways to work together both saving money, and creating new opportunities.

  3. Make sure that your communication lines with your suppliers are strong. You can't visit all of your suppliers all the time. With the tools available today, however, there is no excuse for being out of touch. Email, phone, or better yet, video conference with your important suppliers often, this will keep you on the top of their minds for opportunities as well.

  4. Have a backup plan. If your company relies on particular resources or supplies to stay in business, have a backup plan in place to make sure that you will never be caught in a position of not being able to access those resources. If you have a painting company, work consistently to strengthen the ties between yourself and your main paint supplier, but always make sure that you have a "Plan B" for where you will purchase your paint if something were to make your main supplier unable to deliver. In essence "supplier proof" your business, so that you are never at the mercy of one outside company. This will not only keep you afloat if your suppliers go under but it will help to balance the power in the relationship so that costs don't get out of hand.

  5. Build integrity into your supplier relationships. Always be honest with your suppliers, and expect the same from them. As in any other relationship, honesty and integrity are

  6. Understand your suppliers' cultural environment. All cultures (business cultures included) function slightly differently from one another. To some a promise to ship on a particular date means that they will do whatever it takes to make sure that supplies are shipped on or before that date. To others, it can be more of a loose guideline. Be very clear in your communications, but spend time getting to know your suppliers, and what the expectations are in their cultures so that you can plan accordingly.

If you don't already have one, make a list of all of the suppliers that you are dependent on to deliver your value proposition. By each of these suppliers, list a backup supplier that could step in to fill the supply need in case of an emergency. Rate the strength of the relationship that you have with each supplier.

Internal Supply Chain

The internal supply chain, the time that supplies and resources spend inside your company is just as important as the chain both before they arrive and after they leave. Depending on your business, this may be a very simple process where goods arrive and are placed on a shelf until they ship out again, or it may be an intricate set of systems that transform raw materials into sophisticated products. In both cases, your internal supply chain represents an opportunity maximize efficiency and gain competitive advantage.

Often times, there is more happening in your internal supply chain than there is in your external one. Traditionally we are used to thinking of suppliers as other companies that sell us things, or provide service for us. We continue to use the term "supply chain" when we are talking about processes that happen inside your business because in actuality, there is no difference between a supplier that is a part of your business, and a supplier that isn't. Sure, we have more control over internal suppliers, but a breakdown in the supply chain internally will do just as much damage to your business as an external one. The same concepts of solid relationships built on honest and integrity hold true between functions and departments inside your business that depend on one another to supply them with materials, parts, or resources for internal suppliers as for external ones.