Building successful relationships with suppliers should be a primary concern
for purchasing managers in any industry. Building a relationship that is beneficial
for both parties can be tricky, but if done right, can provide great paybacks
for both sides. Below are tips on how to start building a successful relationship
with key suppliers.
1. Determine the
extent of supplier usefulness and abilities for the entire company. Examine your vendor base and find out where people in your organization
are spending money. You may find that two departments are using the same supplier
but don’t know it and therefore are not benefiting from collective buying power.
2. Periodically
review suppliers for pricing, quality and delivery times. Even if you only have a few vendors or already have everything on contract,
periodically reviewing your vendor base is necessary. You may find that you
are spending more money on certain items but not getting a fast enough delivery
time, or that the quality of the product you ordered has diminished since you
set up the contract. Periodic reviews also help suppliers to ensure that they
are meeting all your needs.
3. Pull reports
from your purchasing system to determine if there are additional areas
of spending for preferred suppliers. This activity is important when
setting up contracts, renewing contracts, or as organizations grow. The more
items you can get on contract with preferred suppliers, the better your purchasing
power and the more you have to negotiate with for better rates.
4. Provide your
user base with an updated list of your preferred suppliers and the items
they supply. Place an updated list of preferred suppliers in
a centrally located place or on the company network and then send out reminders
each quarter or twice a year to the entire organization reminding them of this
list.
5. Negotiate contract
pricing with suppliers. Make sure you know how much
you’ve spent with each supplier annually and how much you may be able to commit
to in coming years.
6. Negotiate vendor
rebates if possible. Once you establish contracts with
some of your key suppliers, see if you can negotiate rebates such as — your
organization pays suppliers faster (within 30 days) and they give you a 2%
rebate each quarter. Success in this area will save organizations as much money
as negotiating contract pricing.
