Suppliers are a fundamental component of any business operation – and the difference between good and bad suppliers can be make or break.
There are a number of critical factors to consider if an organisation is to find not just a supplier able to do the job adequately but one that can also get the best from everyone involved – not just price. From experience to cultural fit, flexibility to responsiveness, good supplier relationships are based on shared values.
Critically, the onus is not just on the supplier: good relationships demand a solid, two way conversation and commitment. From the quality of the initial briefing to on-going feedback and praise, where due, supplier performance will be influenced by trust as much as Service Level Agreements. The foundations for good supplier relationships are put in place before a contract is even signed.
Successful companies share one common trait: strong supplier relationships. Irrespective of size, few companies opt to undertake every aspect of increasingly complex business operations internally. From the required third party relationships with auditors and lawyers, to the optional with web designers and marketing experts, IT services and logistics providers, external supplier services underpin essential aspects of the organisation. As such, the way in which companies procure, brief and interact with suppliers is vitally important.
Whether procuring a three month web redesign or embarking upon a five year IT services contract, the principle is the same: good client/supplier relationships are more effective, productive and rewarding – on both sides – than bad. Rather than simply looking to outsource a problem or allocate a third party to undertake a task that cannot be resourced internally, a good supplier relationship is akin to insourcing expertise. The right supplier can become part of an internal team, working for the good of the business rather than getting paid to hit arbitrary Service Level Agreement (SLA) targets.
To attain this model there are several issues to consider:
· Success demands so much more than the right price
In an era of cost cutting and highly prescriptive procurement processes it can be tough for companies to look beyond contract prices. But when cost is the primary concern, managers are unable to even look for suppliers with the right cultural fit and ability to tie in neatly into the company’s day-to-day operations. The result is unlikely to be a seamless working experience.
It is important to avoid, for example, asking for a full comprehensive quote at the outset just to compare costs. What’s the point, when the people might not be compatible or able to understand the business’ requirements? Comparing costs is clearly important, but it is crazy to limit options up front. Instead, ask for a ballpark and explain that the procurement process will require a far deeper ‘getting to know’ aspect to determine skills, expertise and fit. Critically, undertake some due diligence beforehand: from websites to social media presence, it is easier than ever these days to get a really good feel for a company’s attitude and business focus. Ensuring a cultural match should be a first step.
· Working together to discover and share goals
In a good relationship both client and supplier should bring out the best in each other. But this clearly can only be achieved if the two organisations share cultural attitudes and goals – and that means work on both sides! Simply crossing your fingers and hoping a third party can take a problem away is unlikely to be successful; nor is expecting prospective suppliers to pitch for a contract or job with no clear brief or insight into desired outcomes.
During the procurement process it is essential for both companies to be prepared to put effort in to understanding the skills, experience and outlook of the other. During the ‘getting to know you’ process, a potential supplier should be asking questions about the business, referencing shared contacts or market experience – all of which should make it clear whether or not the two organisations share common working practices and cultural objectives. Furthermore, a good prospective supplier should be willing to share common sense advice up front – rather than insisting on a contract. This is all about building trust and if either side is unwilling to be open, the relationship is unlikely to succeed.
· Committing to the relationship
There is always a risk with a third party relationship that out of sight is out of mind, especially with the ease of email communication and remote working. But no supplier can operate effectively in a vacuum. This does not mean that suppliers need to be micro managed; trust is an essential component of any good relationship. But the more an organisation participates in a relationship, the better the outcomes.
A good briefing session is essential to ensure the supplier has an in-depth understanding of the requirements – for example, a web design agency needs to know not only design preferences but also the audience and the key messages if it is to create the right design.
Building on this initial briefing by providing useful feedback, keeping a good line of communication and being clear about objectives, will continue to reinforce the quality and depth of the relationship. Happy, unstressed people work better – wherever they are based. Out of sight should never be out of mind – even if face-to-face meetings are not geographically viable, opt for routine video calls; and if the supplier has done good work, recognise it!
With the procurement team or Directors breathing down the neck of managers it can be really tough to stand your ground. But making a cost-first decision is starting the relationship on the wrong footing. A good supplier relationship will deliver mutual benefit – and that means both sides being open and flexible. With good communication based on clearly understood, shared objectives and a desire to work well for and with each other, the relationship has a great chance of success.