How to Strengthen Vendor Relationships During a Crisis
“Only recently have people begun to recognize that working with suppliers is just as important as listening to customers.” – Barry Nalebuff
Most businesses spend a lot of time developing relationships with their customers and employees. Very often the value of maintaining positive relationships with vendors is overlooked. For a business to succeed, it’s important that you and your vendors both understand each other’s business goals and needs.
With the current lock down and fears around COVID-19, you have a rare and unique opportunity to reinvent and restructure your vendor relationship. At this juncture, this could be a crucial and important aspect of your business. It could not only save you time and money, but also ensure timely arrival of goods and services from your vendors.
Here are few things you can do to get the best out of your vendors.
Get to know your vendors better
This is a good time to get to know your vendors and invest some time with them. Remember, for once all businesses are in the same boat. It’s panic, fear and uncertainty everywhere. Take some time to understand your vendors’ pains, challenges and fears. Share your thoughts and challenges too. Exchange ideas and options. All this will help you build and develop a strong bond with your vendors. This could have a lasting impact on the way you do business with them. You will be pleasantly surprised to discover a few new and interesting things about them and their way of doing business. The time that you spend now could yield reach dividends in the near future.
If you are not already doing so, maintain strong and regular communication with your vendors. With global lock downs, this is a great opportunity to connect with your vendors digitally. Keep them regularly informed on your plans and don’t hesitate to ask for help. Clear and frequent communication ensures that you and you vendors are in sync and working together toward a common goal.
Furthermore, continue to maintain communication, even when problems arise. Let your vendors know the impact to you when deliveries are late or you experience quality issues. The more effort you put in to working together, the more likely vendors will stick with you during challenging times. Make sure both sides understand each other’s roles and responsibilities. Set up a regular time to connect with your vendors and take your relationship to the next level.
Focus on value and timely delivery, rather than price
It's natural for us to focus on pricing, as a better price will have a direct impact on our profitability and bottom line. In tough times, you should place equal importance on the timely delivery and quality of goods from your vendors. With logistics and supply chain currently being stressed, on-time delivery is a big bonus and could give you a much-needed competitive edge.
You could also plan for bulk deliveries and discuss a deferred payment plan. Your books might show a huge inventory increase, but it could come in handy and make you more agile to adapt to the changing demands. Sometimes it’s better to pay a little more because the vendor is giving you a better service.
Make vendor relationship agreements
If you are buying from a vendor on a regular basis, Vendor Relationship Agreements are a must. It’s a bit different from a pricing and product agreement. If you don't have one, this is the right time to get one done with your vendor. Here are some items you might decide to include in your agreement.
Joint mission statement of your partnership
List of items or services
Delivery plans and schedules
This could be a simple document depending on your business requirements. A well-documented Vendor Relationship Agreement will be your go-to document for guidance in any situation and will reduce the possibility of confusion or disputes. Give it a try and see how your relationship improves with your vendors.
Revisit the lead time
Keep your vendors in the loop by informing them early on of any changes and deviations from your demand or production schedule. Doing so gives them the opportunity to realign their dispatches and delivery accordingly. In addition, give your vendors an adequate amount of lead time to ensure that you can maintain stock levels at all times. This is crucial in such challenging times.
Invest in technology
Invest in technology and business management tools to keep track of information about your vendors. You can deploy purchase order management tools that allow you to collaborate with your vendors for visibility into your supply chain processes.
A good ERP solution can provide information about which products need to be replenished and when, allowing you to give an early heads up to your vendors. Keeping your vendors updated can go a long way in optimizing supply chain processes on both sides.
Refer a trusted vendor to others
During times when business volume is significantly slowing down, it’s a great approach to refer your vendor to potential customers. It’s time to go out and be a go-giver amidst the gloomy situation that surrounds us. When your vendor gets connected to a prospective customer that you referred, their loyalty to you and your business becomes even stronger. This is a concrete way to show your appreciation for their services and it turns your vendor into an ambassador for your company.
Should you need any assistance with your supply chain process, please feel free to connect with me. We have a team of experienced consultants who can help streamline your processes and deliver measurable results.
Find more content on managing through the COVID-19 crisis in our SMB Survival Kit: Leading Through Crisis.