Supply Chain Secrets: How to Successfully Work with Suppliers

Here are five things to keep in mind while working with suppliers.

If you run a products-based business, then you likely know how important it is to find the best suppliers. And if by chance, you’ve found great suppliers you realize how hard it was to find them.

But when you’re working with partners that supply necessary raw materials and products it’s important to monitor the relationship and ensure that those you rely on heavily are equipped to “deliver the goods.”

Here are five things to keep in mind while working with suppliers.


1. Set expectations early.

Much of the misunderstandings in business are due to a breakdown in communication. Don’t expect a supplier to read your mind or to understand your business from the onset. 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 them upfront – it’s much easier to move business to partners who can.


2. Share volume forecasts.

One way you can help your new partners 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.


3. Put everything in writing.

You’ll have quite a few informal conversations with suppliers. Some will even promise you the world. It sounds nice. But not everyone delivers on their promises and you’ll learn this the hard way if you don’t put all of your terms in writing.

Outline what your supplier expects from you and what you expect from them (and that they’ve agreed upon). Then ask their representative to sign it and countersign the documents yourself. Don’t rely on your supplier to draft the agreement or an NDA.


4. Hold suppliers accountable.

Did your supplier tell you that your widgets would be ready on Monday? If so, they should be ready on Monday. Not Tuesday or next Friday. In return for payment, your suppliers are obligated to accept responsibility for their promises and to be transparent with you when it comes to your business relationship with them.

Why is accountability so important? “Because accountability is what gets things done. Without it, things just don’t happen,” according to entrepreneur Danielle Zack.

And if a supplier cannot be trusted with the little things, it would be unwise to expect them to be trusted with much bigger things (i.e. increases in volume). Suppliers are an extended part of your team and the expectations you hold for your team should be similar to those for business partners.


5. Always have back-up suppliers on call.

Can you have a monogamous relationship with a supplier? In some (rare) instances I believe that you can. But this is the exception, not the rule. At times, suppliers may experience things that are outside of their control or simply get greedy.

This means that unless you have something in writing and options – your business is operating in a highly volatile situation. This could translate into price increases without notice, lagging lead times or even quality assurance issues. You may have an excellent relationship with your current supplier – if so, that’s great! Keep doing what you’re doing. But always have another supplier on call to pick up where the last one left off if need be.

Relying on one sole source is risky business. If a supplier is simply not delivering (in more ways than one) start to allocate a percentage of your purchases to a new supplier. Spread your risk and sleep a bit easier at night.


What other ways can entrepreneurs work successfully with suppliers? Let me know in the comments section below.


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