The Importance of Supplier Relationship Management

Posted by Damian Vickers, on Feb, 2014

When it comes to suppliers, the relationship with their retailers is crucial and when it comes to retailers, the reverse is also true. Since your business cannot operate in a vacuum it is important that you have a great relationship with your suppliers. You cannot build a successful business by purchasing your products from whichever supplier is available and has what you need at the time. A good businessman will tell you that supplier relationships are definitely not the same as making simple purchasing transactions. Here are some of the differences:

1. With a supplier there is a sense of commitment that is not there with a simple purchasing transaction. Whatever the product is, the supplier will feel confident that when you need to buy it again to replenish your stocks, you will indeed order from him.

2. Another element that stands out quite well in supplier relationships is that you will plan to buy from him in advance. You will likely call them ahead of time and speak about some of your future needs in order to figure out how you can best work together.

3. Finally, you will consider your supplier as a partner in your business and not simply as a person who provides a commodity when you need it. This is a key factor in supplier relationship management because your supplier becomes an integral part of how your business operates.

It is crucial to build strong supplier relationships and even though many people know this, they still struggle to build them. Their purchasing personnel still do not appreciate that the suppliers are a partner in the business. There are several ways that you can foster a great relationship with your suppliers and encourage supplier relationship management practices that will benefit your organization.

The first thing to do is to locate a number of suppliers that are willing to work with you. Carry out a thorough check on your suppliers. Find out their backgrounds and get some references you can call so that you can be able to choose a company that will fit your needs and one with a reputation for delivering what is needed on time. That done, negotiate contracts with them so that you can plan ahead so that each company knows what is expected of them. Both companies will be better served when they are in a mutually beneficial relationship. They will both experience growth and profitability in their businesses.

Supplier relationship management is important for the success of any business. Finding the companies to work with and establishing a relationship will boost profits and produce growth.

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