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How Small Business Owners Can Best Work with and Manage Suppliers
Ensuring the consistent delivery of high quality services to your customers is top priority. The effective management of key supplier and vendor relationships is an equally important facet to maintain consistent (and profitable) workflow.
If not managed and prioritized accordingly, a bad vendor relationship can result in damage to your business, customer base and reputation as both a contractor and business partner.
Create a Mutually Beneficial Vendor Relationship
Suppliers depend on your business just as much as you depend on theirs to keep your operation afloat. Your business should work to create a lasting, mutually beneficial relationship with suppliers by working with them, rather than making demands.
One of the easiest (and often forgotten) steps in vendor relationship management is maintaining proactive communication between you and your suppliers. Keep an open line of communication and regular touch points, and share important information as early as possible. Your partners should be kept in the loop of seasonal influxes in work, major impending projects and other occurrences that will affect your needs and demands on their services.
You should also prepare for unpredictability and establish a plan to resolve these challenges before they arise. Unexpected issues, like backorders, equipment failure and natural disasters, can delay or prolong a shipment of your materials. In your agreement or contract with suppliers, decide upfront how emergency needs and situations will be handled.
Lastly, while it’s important to develop longstanding vendor relationships, you should also commit to regularly evaluating whether or not your existing vendors / suppliers are still the best fit for your business needs. Committed to conducting due diligence to research and evaluate other solutions or suppliers within the market that could provide a better price or quality that better complements your services.
Decide on Payment Terms
Before falling down a slippery slope of late payments and inconsistent invoices, speak with your supplier about implementing a consistent payment schedule. Communicate what terms would work best for your business’ finances, and how you will handle late payments if they were to occur.
Depending on your business’ credit terms, you may be eligible to pay for up to 15, 30 or 60 after your invoice arrives. It’s important to decide ahead of time what you will do in the event of a late payment, or if supplies are late, as both of these instances can have a profound effect on your business.
Similarly, discuss with your suppliers how ineffective or damaged goods will be handled. One of the best ways to manage this is to ask for a liability insurance certificate. A liability insurance certificate protects businesses when there is a product recall or defaulted error. With liability insurance certificates, you should receive an updated copy each year that you are in business with the supplier. Be sure to discuss with your supplier what limits you’d like to set in terms of liability to protect your business.
Manage Your Suppliers and Vendors in One Place
With the help of supplier relationship management (SRM) software, you and your team of contractors can monitor the performance and details of each of your suppliers easily. Many SRM systems have the option for digital invoicing, which can make it easier to keep track of and receive payments quickly.
Some solutions include Gatekeeper, Vendor Management Software by Intelex. By using a SRM, you can easily keep track of what orders have been placed, which ones are to be expected for delivery and have easy access to all your vendors’ contact info. This can also make it simple to compare suppliers to one another to see which one is the best investment for your business.
To effectively manage your vendors and suppliers, you must establish a strong relationship by communicating upfront about the ins and outs of your business. Be sure to agree on a payment schedule that works for both of your businesses and easily keep track of invoices and supply needs with an SRM.