When you build lasting relationships with vendors, everyone wins. Strong, long-lasting vendor relationships can help you negotiate the best contract terms, and they’re obviously good for vendors, too, who benefit from your repeat business. Managing your vendor relationships successfully isn’t just a matter of negotiating the lowest prices — it means collaborating with vendors to reach mutually beneficial agreements.
Building strong vendor relationships takes time, but it’s worth it. The time you put into building your relationships with vendors pays off in the form of faster deliveries, better products, and the possibility of better financing terms should your business find itself in a tight spot. You may even be able to leverage your vendors’ specialized knowledge of the industry to get ahead in a tight market. Here’s how to turn your vendor relationships into long-standing, mutually beneficial arrangements that strengthen your entire local business community.
1. Communicate your priorities
Vendors need some level of information about your business plans and priorities in order to best serve you. You should share with them whatever information they need to better meet your needs. That includes information about ongoing business problems or concerns, upcoming product launches, design changes, relocation or expansion plans, and some amount of business forecast data.
When you share your priorities with vendors on an as-needed basis, they’re in a better position to bring their expertise to bear on your situation. You might be pleasantly surprised at the solutions your vendors come up with.
2. Work towards long-term partnerships
Don’t constantly jump from one vendor to the next just to save a buck. Long-term relationships are more valuable than short-term savings. Successful vendor management seeks to gain the long-term commitment of vendors to supporting your business goals, but they need to know you’re committed to supporting their goals, as well. Long-term relationships gain you access to insider expertise and preferred treatment, and once you’ve established a strong relationship with a vendor, you should return the favor.
But don’t sell yourself short––look for vendors who can offer the capability to grow alongside your business. You need vendors who offer reasonable contract terms, and who have the capacity to scale as your business grows. Of course, you should always balance your commitment to particular vendors with a healthy dose of competitiveness, and take bids when contracts come up, but consider the whole package that a vendor offers, not just the price of their goods or services.
3. Use technology to your advantage
With so many high-tech tools at your disposal, you’d be remiss not to implement vendor management software to keep track of your vendor relationship, supply chain, and procurement spend. You can implement a vendor management software system to centralize and organize vendor information, send reminders, analyze risk, and easily specify what info you need from all stakeholders. It’s so much easier than chasing after vendors for information all the time. It can do wonders for improving your supplier relationships, especially when you begin to accumulate a lot of data about various vendors.
4. Pay invoices on time
Few things can raise your esteem in the eyes of vendors like paying all your bills promptly and in full. Vendors have kids to feed, too, and when payments are late, their businesses suffer. No one likes having to chase down the money they’re owed. Pay your bills on time — set reminders in your calendar if you have to. With a history of prompt payment behind you, vendors will be much more willing to collaborate with you on business strategies and solutions, or to extend credit if you need it.
5. Learn about your supplier’s strategies
Successful vendor relationships are, like all relationships, built on two-way communication. Just as you want your vendor to understand your business and strategies so they can better help you meet your goals, you need to take the time to learn about your vendor’s business and strategies so you can help further theirs.
Don’t constantly hassle vendors to give you better deals, deliver faster, or cut costs — show them the respect of paying their fair prices, giving them adequate lead time, and asking about their side of the business so you can help the relationship succeed.
When you’re running a small business, strong relationships with vendors can be crucial to your success. You can get better contract terms, better solutions to your business problems, and invaluable support from vendors who enjoy working with you and have done for a long time. Don’t wait. Start working on your vendor relationships now, and watch your business, and theirs, flourish as a result.