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Supply Chain Strategy: How to Nurture Supplier Relationships

Michael Wilson | Mar 2, 2015

The relationships with your suppliers can be the difference between barely making a profit and earning a healthy living from a business. Improving your supply chain strategy is an ...

supply chain strategyThe relationships with your suppliers can be the difference between barely making a profit and earning a healthy living from a business. Improving your supply chain strategy is an easy way to improve revenues, and one of the most critical steps for improving your strategy in this area is building strong relationships with your suppliers.

Why Focus on Supplier Relationships?

Even with the huge number of different tasks that must be completed for success in the modern enterprise, the most astute supply chain professionals know that building relationships with suppliers is a crucial part of positive business development. Not only can suppliers have a direct impact on your profit margins, they also have an effect on your customer service: if your deliveries are held up, for example, what kind of impact will it have on the way that people perceive you?

When you build strong supplier relationships, you can ensure that you are able to get the best possible results in these areas. Just as your suppliers understand that you have a value to them as a customer, you should reciprocate by providing your suppliers with only the best treatment. In fact, Entrepreneur suggests working just as hard on your supplier relationships as you do on your customer relationships.

Now that you know the importance of building supplier relationships when it comes to supply chain strategy, you must also understand the best practices for growing these relationships.

Developing a Supplier Relationship: The Early Stages

The first thing that you need to do in order to build good relationships is determine which suppliers are best for your supply chain strategy. The kinds of suppliers you choose to work with will vary based upon your business model and size.

After identifying the right suppliers for your needs, it is important that you establish good communication with your supplier. Verbalize and communicate your needs, your expectations, and any requirements that they have of you. While you should not compromise your operation or its budget to please a supplier, you should be fair with them and as understanding as possible, especially in the early stages. This will have a huge impact on your supplier relationship going forward.

How to Handle Supplier Problems

Dealing with supplier issues is a standard part of supply chain strategy. Every business has a different way of facing these challenges, but in the context of supplier relations, it is important that you are as fair as possible. If the supplier has made a mistake, give them a chance to correct it: you may be able to work out a good deal with them, or get a replacement order expedited to your location. Although repeated mistakes are a sign that you should re-evaluate your supplier relationship, everyone makes errors from time to time, so you should try to ensure that you are lenient with a supplier that you feel can be an important supply chain partner.

It might not seem like a big priority to work on your supplier relationships, but your supply chain strategy is only as good as your sources of raw materials. By taking steps to improve relations with suppliers, you can foster better relationships that will provide mutual benefits for everyone involved.

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