There is no question about it, the advances in the digital age have made supply chain and vendor management more efficient. The advent of systems that handle everything from demand forecast to just in time inventory have been beneficial to both buyers and vendors, among other things shortening lead times and reducing inventory costs.
Technology can hasten the process, but it is important to remember that vendor management is also about relationships. Here are ideas to build a healthy and mutually beneficial relationship with the vendors you value the most.
Understand that your vendor is in business to make money. A vendor that is constantly asked to cut cost invariably will cut quality first, before shunting you to the bottom of the preferred customer list. Vendor management is not all about price; a healthy vendor relationship is a commitment to improve productivity and competitive advantage for both parties.
Using vendor provided parts and services are essential to move product out the door, including key vendors in production strategy meetings can create efficiencies for both companies. A good vendor does what they do well, tap into their expertise for insights from product development to production to put your firm ahead.
Negotiate in good faith and look for a deal that both parties can draw value from. Strong arm tactics and one sided deals may provide short term results but the gains will be marginal, compared with the potential costs of a toxic vendor relationship.
Come to a consensus on value. That is not paying the lowest price but focusing on the quality received for the dollars spent. A higher price should go hand in hand with higher quality and a commitment from the vendor to maintain or improve their quality standards.
Remember the best relationships are for the long haul. Switching vendors to chase a half a penny here and a half a penny there will cost more money in the long run. Quality will fall and on time delivery will likely become a thing of the past. Developing long term relations with key vendors allows you to use their expert knowledge and may afford you preferential treatment.
Vendor management has come a long way from the days when “Your failure to plan does not constitute a crisis on my part.” was an all too common thought in the minds of many vendors. Today it is essential for both buyer and vendor to be in a win-win relationship allowing for healthy growth of both businesses.
An important part of any relationship is communication; SourceDay can help you connect with and monitor vendor performance to help you maintain long term and beneficial relationships with your suppliers.