Suppliers play a crucial role in every business. Whether a business is small or large, these companies require a good source of the raw materials that they need to produce their products and services. Suppliers are vital in every stage of the product life cycle. When a company fails to acquire goods and services from a trustworthy supplier with quality products, that company’s goods or services depreciate in value, making its consumers unlikely to appreciate its brand.
One of the key advantages of a company in any industry is working with a supplier whom they can trust with their goods and services in production. Part of running a business is reflecting on how much supplies affect the cost and quality of the goods or services a company produces. Having a healthy relationship with suppliers strengthens the image and quality of a brand, creating more quality products or services and more happy customers. It’s essential to engage directly with suppliers to avoid troublesome transactions, and in doing so, we have set up a guide on how you can check the track record and product quality of your suppliers or prospective suppliers.
Table of Contents
Why Are Suppliers Vital in Business?
Developing Your Supplier Relationships
What is Supplier Relationship Management (SRM)?
The Process of Supplier Relationship Management (SRM)
Supply Relationship Management (SRM) Benefits
Choosing the Right Supplier for Your Business
Takeaway
Why Are Suppliers Vital in Business?
Imagine if you’re running a business and you get your raw materials from middlemen companies who charge about double what suppliers ask for. You’d be spending a hefty amount of money on the cost of the products or services that you will be selling in your company. Aside from this, if you purchase your raw materials from companies that don’t offer wholesale or lower costs per unit, then this means that you will be selling your products or services at higher prices. With higher prices involved, you’d be telling your customers upfront that you are demanding a lump sum of money for a single product. Witness how your customers will raise their eyebrows at you once you start increasing your prices, and you should start thinking to yourself about whether or not they’ll still be loyal to your brand.
Nobody wants to spend money, not even you. As much as possible, you’d like to acquire the most quality goods at the lowest price. Inside or outside of work, you’re also a consumer one way or another. You spend money on groceries, dental fees, clothes, and other things. So, it’s fair to say that each of us knows how much the costs of goods and services matter. Even if we are filthy rich, we still think to ourselves about the money that we spend on products or services. So, as a business owner, you should be able to have enough empathy towards your customers with regard to the prices of the products or services you offer.
Even if your brand can afford to buy at a high cost from non-suppliers, chances are that not all of your customers and target market will appreciate the same showcase that you are offering. Be cautious of how you shape your prices because sometimes, customers can take just one second to change their minds and move to another brand that offers more products or services at a more significant quantity but at a lower price. You don’t want your loyal customers to be unfaithful to your business and replace you with a different brand. Loyal customers are hard to find, which is why it is essential to take care of your relationship with these customers.
Keep your customers coming back by working directly with suppliers who can offer you quality products or services at the lowest price per unit. When you buy at wholesale prices, you’ll be able to save a ton of money from your budget, making the costs of your products or services cheaper – providing your customers with a price that makes them spree. When you work directly with suppliers who offer wholesale prices, you can build the foundation of your products or services more efficiently because you will be saving more money instead of working with non-suppliers who tighten your budget.
You will have the opportunity to splurge on other things that can build up your brand, like publishing, media publicity, marketing, packaging, and different sorts, when you work with suppliers who offer their best prices to your brand. Choosing the right supplier for your business is a vital part of your brand. You can’t just pick from a list and decide on a supplier at random. Suppliers may be the make or break of your business. Make sure you choose to work with a supplier that suits who you are as a brand. As you grow to be a larger company with more customers, you will be building on your brand identity as you work together with your suppliers.
Developing Your Supplier Relationships
Working with your suppliers is just as important as working with your customers. You don’t want either relationship to be tainted with problems that you don’t want to exist. Other companies struggle with working with their suppliers because they think of their suppliers as a company that is not part of the foundation of their brand. When a company does not work well with its suppliers, chances are that countless issues will arise as they work together through each project. On the other hand, if a company performs well together with their suppliers, all the more they will receive better services and perhaps freebies and space where they can both function more effectively. This is why it is essential to treat your suppliers with as much importance as you treat your best clients.
Developing your relationship with your supplier may take time. However, you may work on building relationships with your suppliers through a framework that you can follow alongside your team members who will work closely with your suppliers. Say if you have a supply chain manager, allow your team members to be familiar with the framework that you have built to be able to engage more effectively with your suppliers. This way, each person involved will not miss out on any part of the process that hopes to build better relationships with your suppliers.
Having a healthy relationship with your suppliers improves how your service functions and how the quality of your goods are made. Know that your customers will notice even the tiniest difference when you acquire quality raw materials from a supplier. Developing a good relationship with your suppliers improves your efficiency in the business you are running and your service to your customers. For example, if you have a favorite food from a restaurant and suddenly you’re brought to an epiphany that it tastes saltier than before, you ask the server why, and they say it’s because they changed suppliers. The same feeling arises when you switch suppliers suddenly. Your customers will know how drastically a tiny change will affect your product or service when you keep changing suppliers. So, choose to work with a supplier whom you can trust and work with in the long run.
Having a good supplier company to work with as part of your business will help your business to flourish at a more efficient rate, compared to how it would run if you keep changing suppliers. Forming a good relationship with your suppliers will provide your company with much-needed ease when running your business and producing your products and services. Your business must continue to grow alongside your supplier, which is why deciding on a good supplier matters.
What is Supplier Relationship Management (SRM)?
In plain terms, Supplier Relationship Management (SRM) is a process that companies approach to evaluate companies who supply goods, raw materials, and other services such as organizational support. This process allows companies to determine which suppliers are most suitable to their needs and requirements. Choosing a supplier is a challenging process as this would aid in identifying how a company will work towards its success and how it will develop its strategies in the business as it performs to work according to its goals.
Supplier Relationship Management (SRM) will help businesses provide value to the products they are aiming to sell, as they will gauge in choosing companies who will be the wings of their business. Supplier Relationship Management will aid in the continuity of a business and how it will perform as it acquires goods or services from the suppliers chosen.
The system called SRM is a discipline that supply chain professionals deal with on a regular basis. In this area of procurement, suppliers are the start of the stage, much like a talent show, where they will have to showcase what they can offer to the companies who are scouting for suppliers. While SRM is one of the disciplines of Supply Chain Management, it poses similar qualities to Vendor Management alongside Procurement Processes. The main difference between Vendor Management and SRM is that Vendor Management is focused on deciphering the costs of goods or services that will be agreed upon by companies and their selected suppliers. Vendor Management deals with the service-level decisions of companies between their suppliers; it tackles situations of invoicing, payments, ordering, and delivery.
The goals of SRM differ from one industry to another, having different requirements for each business or organization; each business is unique on its own. The general objective of Supplier Relationship Management is to streamline the improvement of how companies work with their suppliers and the processes that occur as each business decides on which suppliers they will work with. Similar to Customer Relationship Management (CRM), there is a requirement to improve the process of how companies form a mutual relationship with their customers. Both of these disciplines are deemed important in the innovation and business strategies of a company.
Supplier Relationship Management has become more popular and vital as buyers become more aware of how supplies and raw materials affect the quality of goods or services produced by companies. Buyer-supplier relationships are interconnected networks that have rippling effects on each other. If the price of raw materials increases, so will the cost of finished goods or services. If the quality of a specific raw material depreciates in value, so do the finished goods that are produced by companies. This means that one may not function effectively without the other.
Choosing a supplier for your business will mark how your goods will turn out. Some suppliers are meticulous with their products or services as they aim for excellence alone, while others are laxer with the products or services that they offer. The choice deciding which supplier to choose is highly dependent on you – the owner of the business, your team’s say, and your goals as a business. To achieve excellence, a company’s SRM must provide a strategic approach to a devised action plan that supplier companies may work with. The devised plan must be at the agreed understanding of the supplier in order to proceed with a process that is action-driven.
Effective strategies in Supply Relationship Management demand a strong relationship between companies and their suppliers. A cultivated relationship with suppliers is more likely to succeed compared to one that is poorly constructed. The goals of a company and its suppliers must align, if not, the work in which they engage will not turn out smoothly. Team members who are involved with Supplier Relationship Management must know their company or organization like the back of their hand in order to quickly address their goals and assert their company’s requirements with the supplier they have chosen to work with.
The Process of Supplier Relationship Management
One mustn’t think that Supplier Relationship Management is just a discipline that does not require any steps. Like anything else in business, there are steps that are needed to be followed. Of course, you may design these steps according to the needs of your business or organization, but there will always be a set of actions that one must follow in order to observe proper implementation.
- Segment Suppliers
Segmentation of Suppliers involves the identification of supplier companies and how each of them is categorized according to the importance they offer to the company that is choosing a supplier.
- Supplier Strategy Development
The development of supplier strategies involves creating strategic plans that aim for the best performance of the company deciding on a supplier. Certain aspects play a part in this step as the metrics and sales figure goals of a company must be taken into account.
- Strategy Implementation
Strategy Implementation is the final step in the Supplier Relationship management process. This step involves assigning individuals from the selected supplier company to fully act upon the offers and promises they have set out with the company that has been in the process of selecting their supplier.
Above are the 3 Steps for Supplier Relationship Management. If you need more time to remember what the three steps are, think of them as the 3S’ or “S” to the third power. The first step which is the Segmentation of Suppliers is the foundational step that companies must work on as they decide on which suppliers to choose from. This first step involves sifting through the many offers and many names of supplier companies. Know that not all supplier companies are fit for your business, even if they offer the lowest prices.
The second step which is Supplier Strategy Development talks about how companies can provide a plan of action to how they want suppliers to execute their agreed plan. This step is important in the performance of a company, as the agreed plan will dictate how efficiently and effectively a company will turn out. When a supply strategy is made, this must coincide with the business goals of a company as it will be the standard of how succeeding operations will be made.
Strategy Implementation is the third step of the process of Supplier Relationship Management, and this step is the organizational setup of both the supplier company and the business that is hiring the suppliers. Strategy Implementation ensures that each planned action is made and no plan is missed. This plan oversees which measures must be taken and how well they should be performed in order to assert the quality assurance of each step and supply that will be carried out to the company.
Supplier Relationship Management Benefits
- Increase attention of suppliers and action-initiated responses
- Decrease issues and risks in supplies
- Reduce costs
- Provide better plans and more curated supplier agreements
- Increase the quality of acquired products or services
The benefits of having a team and program for Supplier Relationship Management in one’s business will mark how well your company’s operations will go. The benefits of SRM go far and wide as it functions through a variety of characteristics that affect how your products or services are made. Some of the benefits of SRM include scheduling, performance analytics, order histories, invoices, contract management, operational procurement, and supplier performance management. Each of these is important in how a company will work on its improvement and growth.
Choosing the Right Supplier for Your Business
As earlier said, choosing the right supplier for your business may be difficult and time-consuming. When you decide on which supplier you will be working with for the production of your goods or services or for the acquisition of your raw materials, you must consider the following tips. It is essential that when you choose a supplier, you see to it that you can see a future between your business and the supplier you will work with. It’s a lot like choosing a life partner; if you see an end with a person, it is more likely that the two of you will work out.
- Choose the supplier who aligns with your business goals.
It’s almost a given that you should choose a supplier that aligns with your company’s goals. Why would you choose a supplier company that doesn’t align with your company’s goals and priorities? It is vital to know if a supplier company can work with you to achieve your business goals. See to it that you establish what a supplier company can offer your business and how they will follow through with their plans on supposedly working with you.
Part of deciding whether or not a supplier company is “the one” is checking how well they have worked with other companies. Do they act on the promises they say? Are they prompt with their work? Do they have a good reputation as a supplier company? Do they pay taxes, and do they provide wages for their employees? Do they contribute to environmental sustainability? These are the things that you should ask yourself when deciding on which supplier company you will be working with.
- Know what your supplier’s needs are and what their non-negotiables are.
If your relationship with your supplier is a one-sided one, then don’t be surprised if problems between the two of you will keep arising. This is why you must also know what your supplier’s needs are and see to it that both of you reach a common ground where you meet each other’s needs. You can’t be the only party demanding so much while the other one suffers. Nobody wants tyrants who drag people and lead them to the aches of not achieving their needs.
As you decide on which supplier you will be working with, you must also know what their non-negotiables are. If you are looking to purchase 1000 office chairs every year, but your supplier gave you the full offer of just 500 chairs per year, maybe that supplier isn’t for you. Alternatively, maybe you can rehash your number and demand less of an amount where both of you can be happy with a mutual agreement.
Creating both win-win negotiations between you and your supplier can strengthen business relationships, opening more opportunities to buy items at even lower prices and quality products from your suppliers.
- Walk your talk and treat people kindly and with respect.
Palabra de Honor or loosely translated from Spanish to English as a “word of honor.” Be a person with your word. Don’t walk back on your talk, and don’t make promises you can’t keep. Even you dislike it when somebody doesn’t abide by their words, so don’t be the person who does that – especially in business.
This is the most basic and essential thing you will ever read in this article, treat people kindly and with respect. No matter how stressed you are or no matter how badly a plan went in your business schedule, always be mindful of your words and actions. Treat people the way you want to be treated – with respect. You’re aiming to treat others the way you would treat a queen or a baby, but just treat people with basic care. Other than respect, be kind, whether you are portraying your role as a business owner or not – every place is a place for kindness.
- Communicate regularly.
In any relationship, not just with suppliers, communication is always essential. Keep in touch with your supplier partners about your orders, shipping schedule, and the next steps that you need to follow in your agreed timeline. Communicating regularly with your suppliers will eliminate the amount of confusion that either party will experience as the process of your partnership goes on.
Regular communication with your suppliers will also allow a helpful system to form as there may be instances where either party requires clarification regarding a specific task or order. Plus, there’s no harm in communicating what you need from your suppliers and receiving the information that you need and vice versa. Create a habit of regular communication to strengthen the partnership between your business and your supplier.
- Provide feedback and be open to receiving feedback.
Do not be afraid of feedback, and be not afraid of giving feedback. Providing input and receiving feedback is an excellent way to learn. You won’t be striking your team members or supplier partners with criticisms about them personally, instead, you will be providing them with the necessary information that will help them grow.
Though providing feedback is vital in a business or person’s growth, you must also know your limits in providing remarks to your team members or supplier partners. There are areas that you can comment on, and there are areas that are strictly prohibited, which is why you must also familiarize yourself with the ethical remarks that you may share in the business world. For example, providing insight about the quality of tables delivered to you – is acceptable and good information for your supplier company to improve. On the other hand, commenting about a person’s weight, whether they are part of your team or outside of your team, will be deemed disrespectful and unethical.
- Remain loyal and acknowledge good service.
When you’re working with a supplier, see to it that you acquire your raw material, products, or services from your partner suppliers alone. If you can work with your supplier about agreeing on a set number of goods or raw materials, then you may receive a better deal compared to if you will be outsourcing products or services.
Working with multiple suppliers for the same product may not just be costly but also dismaying to your partner suppliers. This situation would make it seem as though you are colluding with your partner supplier’s competitors, making the trust you have built unsteady. In business, and especially in partnerships, you would want to work with people whom you can trust – which is why you must also be a trustworthy partner to your business partners and supplier partners.
- Work together as a team.
Your supplier partners aren’t just third-party companies whom you work with. Know that even these companies whom you partner with become part of your team. Take care of the relationships that you form with these partner companies, not because you want something from them, but because you are a good entrepreneur and a good business. Even if your supplier companies are part of your team, work with them as you achieve your business goals and as they achieve theirs. Be the business that takes its transactions forward to the highway of growth.
Speaking of choosing the right supplier for your company, here’s one eCommerce platform that proves reliability and quality with guaranteed efficiency – Shoppable. The company is a startup in the eCommerce industry that stands as the Philippines’ first digital procurement platform.
Here’s why you should join Shoppable…
- It’s FREE – It’s free to start selling on the Shoppable platform. As long as you’re a legally registered business, you’ll be able to list products for free on Shoppable. You only pay a commission if an item sells on the platform, and you get paid.
- Expand your Customer base – Through Shoppable, you’ll reach thousands of new customers for free. Think of Shoppable as your marketing arm that you only pay when you have a sale.
- Get your eCommerce Store – Increase sales by digitalizing your product catalog and reaching customers worldwide. Print catalogs are dying, costly, and not environment friendly – digital is the future. Sellers can get their eCommerce store on Shoppable Business that can be given to any client.
- Procurement Technology – Enable your customers to pay you online through Bank Transfers, Credit Cards, Over-the-Counter Payments, Recurring Payments, and more. Easily track and manage orders, payments, and shipping through the Shoppable platform.
- Shipping Technology – Shoppable has integrated directly with multiple shipping couriers, enabling you to provide same-day to next-day delivery to your customers.
- Compliance – Sales invoices and 2307’s required? Don’t worry. Shoppable has got you covered! The platform keeps sellers fully compliant, never worrying about missing documents.
- 3PL & Fulfilment Services – Need additional manpower? Shoppable can provide you with warehousing and fulfillment solutions so you can expand your brand to different locations enabling you to get products delivered faster to your customers.
- Real Sellers, Real Buyers, and Real Products only – We vet and interview sellers that join the platform, so you will be assured that all of the products and transactions are authentic and legitimate.
Takeaway
Lay the foundation for building a solid relationship with your supplier companies. Knowing who you work with and how you want to achieve your business goals will create a healthy work atmosphere for both you and your supplier partner. As mentioned above, see to it that you make your needs known and you understand what your supplier company can offer. Both of these are integral parts of knowing if you can work well with your supplier partners.
As you go along with your business relations with your supplier, continue to build on the foundation you have set. Communicate, be respectful, adapt, and stick to the timeline you have placed with your supplier partner to effectively create the products or services you will make in your business. Be devoted to the action plan you have designed with your supplier partner so that you will not miss out on the steps that are important to your growth and success. A good business is formed when it has a trustworthy supplier. And if you’re having trouble finding suppliers, join Shoppable Business. It is an eCommerce platform that is completely free to signup, and each supplier goes through a Brand Registry Program that ensures each supplier provides quality and original products. Gain a higher rate of supplier partners when you choose from the pool of supplier companies at Shoppable. You won’t regret joining because each transaction is seamless, hassle-free, and fully encrypted – built to protect your security as a buyer and seller.
Start your business the right way with Shoppable Business! Message them now and take your business on the path to success, reach them at [email protected], and you’re on your way to starting a successful business.
