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Mistake #13

Not Treating Your Suppliers Like Customers

I learned a precious lesson in my first company, Bullseye Database Marketing, and that was the importance of suppliers. At the time, the conventional approach was to treat suppliers with a heavy hand. Instead, I took them on sales calls, got their input on our production process, and even invited them to our Christmas parties.

In this book, I often refer to the benefits of outsourcing, so it only makes sense that I discuss how to manage these relationships. You need excellent and reliable suppliers. And, when you find them, treat them the way you’d like to be treated. It’s essential in marketing because you’re likely to have many suppliers. Treat your suppliers more like business partners and less like “vendors.”

Approaches to Suppliers

One goal with suppliers is to get assistance and buy-in on the operations of your business - as you do with employees. It may involve a complete change of perspective for some business owners.

There are two philosophies on how you deal with suppliers:

 Reactive approach. Managing supplier relationships is to confront them when something goes wrong. This approach wastes a lot of time and resources.

 Strategic approach. The strategic approach calls for a change in mindset – your suppliers are viewed as partners and are vital to the success of your business. They even help with your strategy because they are so much a part of your business.

Suppliers can make or break your business. They impact the quality of your product or service, the timeliness of deliveries, your competitiveness, and can even be a source of great referrals.

How to Manage Your Suppliers

Build good relationships with your suppliers like you do with your top customers. You can be demanding, however, be fair in how you treat them. Here are some of my guidelines for dealing with suppliers:

1 Price fairly. You need to negotiate the best price you can but, remember, your vendors want to make money too. Continually changing vendors to save a dollar here or there will cost you time and money. Sometimes it’s good to pay a little more because your supplier will give you better customer service.

2 Pay bills promptly. Whatever you do, pay your bills on time. Nothing will gain you more goodwill and benefits with your suppliers than observing this one simple rule. Suppliers like timely payments just like you do.

3 Communicate expectations. Two-way communication is critical for a successful customer/supplier relationship. Communicate expectations in writing, which can be in the form of an SLA (service-level agreement) or just a memo outlining expectations. Provide as much lead time as possible on your orders.

4 Review performance. It’s a good idea to review your suppliers’ performance regularly. Schedule periodic performance reviews and evaluate the timeliness of deliveries, quality control, communication, and anything else that you feel is important to the relationship.

5 Show them some love and personalize the relationship. Visit their facilities if possible. Invite them to strategy meetings (or Christmas parties like I did). If the subcontractor isn’t local, try to move the relationship to a more personal one.

6 Make referrals both ways. Your suppliers can be a great source of referrals. You should do the same for them. Make referrals a part of your regular meetings. You can even co-sponsor events with your suppliers.

7 Manage risk. When you develop these great supplier relationships, always make sure that you have a back-up. You don’t want the exposure of being too dependent on any one supplier. Keep a second on hand in case of emergencies.