Successful Vendor Management How to Improve Your Business Relationships

Collaborating with your vendors (suppliers and service providers) is essential for the operational efficiency of your enterprise. Keep in mind that this is a relationship from which both parties are supposed to get something of value.

The matter of price is usually the first issue to be resolved, which is why it is unlikely that this will be your tripping stone or a point that needs to be altered/improved. Sure, loyalty should be rewarded, but changing the price later in the process either happens for a reason (a very good one) or leaves one side quite disgruntled.

With all of this in mind, what techniques can you actually resort to in order to improve your business relationships? Here are several you should check out.

Ask for Their Advice

Keep in mind that you usually work with one vendor per aspect of your business. Still, the amount of work they do in this field and the volume of products they provide usually make them experts in this area. So, it’s only logical that you would ask them to provide you with some advice while trying to organize a general strategy.

On the one hand, this provides you with invaluable information. At the same time, everyone likes it when their expert status/authority is recognized. This way, you get both of these perks at the same time.

Keep Records of Everything

Sometimes, it’s easy to lose track of your history of cooperation. This is primarily due to several reasons. For instance:

  • People give the most weight to the most recent events.
  • If a pattern recurs irregularly and over a long period of time, people sometimes fail to notice it.
  • Looking at the big picture or estimating a net gain or loss over a long period of time is difficult.

Keep in mind that records are everything, but formatting, keeping them, and keeping track of them can be quite difficult, as well. Ideally, you would turn it all into structured data by putting it into a table, but just formatting this table would be so difficult and take a tremendous amount of effort.

Instead, you might want to look for an intelligent information management system. Even more importantly, you might have to share this data with all the affected parties. Tools like M-connect can help with this reach extension and improvement of workflows to new audiences.

Understand Their Point of View

There’s nothing easier than just to assume that you’re getting the short end of the stick every time the negotiations (or even a single meeting) go wrong. Sure, this doesn’t mean that this will never be the case, but in order to establish a relationship based on trust, you need to try and understand your vendor’s business. In other words, try to show some empathy but also remember that you’re not running a charity organization.

Start by examining their competition. This will help you understand several issues:

  • Are their prices fair?
  • Do they offer more than their competitors?
  • What kind of special offer do they have?

The last thing you need is to learn how to put your business first. If you suddenly decided to change vendors, would you face any kind of loss? Would breaking off these professional connections have some sort of repercussions? Is the next vendor that you replace them with going to take too much time to get acclimated to your workflow? Every change causes stress and a potential (temporary) loss. All you need to do is try and estimate whether the change is worth it.

Keep Communication Alive

Communication is the key, and one of the first things you need to understand is that you’re giving them constructive criticism by complaining (if you have reasonable grounds for it). In other words, by fixing this flaw in their system, they get to improve their business model, as well.

Keep in mind that if you’re working for them in the long run, some form of personal networking might be appreciated, as well. So, take their representative out for dinner. If they’re from across the party, invite them over and help them have fun in your hometown. These personal relationships and the exchange of private contacts will only facilitate communication.

Opting for the right communication channel can also make a difference in the efficiency of this plan.

Remember that they need positive feedback, as well. Some partners never give the words of praise but keep radio silence when things are running smoothly. Don’t do that!

Align on Values

Finding mutual interests with your vendors is fairly easy. Both of you want the increase in income, the simplification of the logistical aspect of the business, and long-term collaboration with no downtime. The problem is that just because you have the same interests as someone doesn’t mean that you share the same values.

Just bear in mind that this is something that you should look into long before you actually strike a deal with them. Make sure your corporate cultures are complementary, and this will make any cooperation or collaboration in the future run much more seamlessly.

Automate Processes

The most important thing you need to keep in mind is the importance of automating your processes in order to appear more professional and have greater reliability. Being late with a payment, response, etc., sends a bad image of your business.

In the business world, reputation is one of the most valuable assets that you have. It is also the most difficult to build back up once you ruin it. By automating various processes (especially your payments), you’re minimizing the risk of this ever happening.

Specialized Vendor Management Systems

One of the best ways to streamline your vendor management processes is to consider getting a VMS (vendor management system). These tools are easy to use, automate the majority of processes such as payroll and hours logging, and help with project management. Other than this, they provide automation, help with compliance, and drastically boost transparency, which is one of the main issues with vendor management to begin with.

By reducing the process lifecycle, these VMS tools can even help you reduce process life cycles. Lastly, with the use of these tools, you get access to advanced reporting and analytics, which is a reward of its own (something we’ve already discussed at length).

In Conclusion

Proper vendor management is really the only way of keeping your relationships with suppliers solid and reliable. While a lot of this can be automated through vendor management tools, the truth is that whenever it comes to networking, human interactions cannot be replaced. So, try to keep the perspective of what’s really going on, make sure that your deal is fair, try to communicate on a regular basis, and make sure that you keep all the records.

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