Warning: Poor Supplier Management Can Be Costly And Result In Unnecessary Stress.
And that's before you try to sell a business. Practice good supplier management. All businesses rely on suppliers, and most extensively. Don't confuse suppliers with employees, just because employees supply labor.
Suppliers ordinarily provide you with something today, and let you pay for it some time in the future. Although most suppliers offer you 30 days credit, in practice the majority are not paid then. If you have an established relationship with them, and you have worked at keeping it good, 30 days can stretch to 45 days and beyond. When was the last time any one of your employees let you delay paying wages for 15 or more days?
It frequently comes down to personalities. As part of supplier management, be pleasantly businesslike in your supplier relationships. It costs no more to be pleasant. And when you need something expedited, a supplier is much more likely to help you out if he likes you. Aren't you more inclined to go the extra mile for someone you like?
Good relationship management does not advocate ignoring service, quality, and price issues. They are part of the businesslike part of your approach. There is no advantage in being a nice sucker. Deal with all of these important business issues in a pleasant, firm, fair, businesslike manner.
Suppliers understand your need to have more than one supplier. Whenever possible, they too have multiple suppliers. Your challenge with managing these relationships is to come up with the right strategy. In dealing with each of the key products or services that you need, how many suppliers do you want? What are your criteria for choosing them? And like most things, you need to clearly identify the person in your business with primary responsibility for supplier management.
Some larger businesses have chosen to refer to this activity as supply chain management, or logistics management. They frequently employ someone called a logistics manager. You may not have that luxury. Regardless, the ultimate responsibility for supplier management is yours as the owner. Doesn't matter if you choose to delegate it to someone else for day to day matters.
Many businesses have evolved a kind of informal policy that is not well understood, but that seems to work. If you are constantly feuding with suppliers, or they have to constantly chase you for payment, you should probably become serious about your relationships. Something that sophisticated business buyers will do is check with suppliers to your industry to gauge your reputation. They will want an appropriate discount for poor supplier relations.
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