Some of the most integral parts in ensuring a businesses’ success are also capable of causing a businesses’ failure. Employees, customers and vendors, while necessary for maintaining a businesses’ operations, can also pose some unique challenges for these businesses to adapt to. Regardless of your organization’s size or scope, this post and accompanying infographic should provide you with valuable information and tips regarding the keys to establishing profitable relationships with your vendors.
One of the first steps in establishing these relationships is understanding how they should operate. The vendors that you work alongside should do everything in their power to become your most favored vendor. The same should be true for your business. Rather than operating in a way that takes advantage of your vendors, you should look for ways to mutually benefit your vendors in any way that you can. Namely because having a larger vendor base than any of your competitors can serve as quite the competitive advantage in your industry. Organizations with extensive vendor bases benefit from the best pricing deals, the best service options (both regular and emergency), the newest product introductions and even better stock allocation incentives when applicable. These benefits then open doors for your organization to potentially increase profit over the long-term through new additions to your product offerings and depth of stock.
Rather than cherishing the benefits that these relationships provide; organizations will often fall victim to tarnishing these relationships. One of the most common ways in which these relationships can be ruined is through communication and interaction errors. Whether that be through paying too much attention and smothering vendors, or the opposite; not paying enough attention and disregarding vendors, organizations should avoid bringing the worst out of vendors and instead should focus on ways in which they can bring the best out of their vendors.
Sometimes the challenges that arise in these relationships can be as a result of the organization’s operational dynamic. If, for example, an organization has unique operational codes or guidelines that must be met, they may need to invest in more advanced supplier education tools in order to simplify the relationship in any way that they can. Some of the other common issues that arise in these relationships come from the negotiations shared by both parties. Namely, if an organization negotiates too harshly in their favor, vendors won’t be interested in sticking around. The same can be said for organizations that go overboard with vendor compliance fees and chargebacks. Crafting a relationship that is mutually beneficial is the key to long lasting vendor relationships.
As mentioned previously, the more sophisticated your organization’s operational procedures are, the tougher forming these relationships will be. Often times, it will require your vendors to use a compliance management service that is meant to simplify their accounts receivable deduction automation. These services are meant to resolve any issues between parties related to lost capital. Not only do these services save both parties money, they allow vendors to fine-tune their offerings and thus serve your business more effectively. For more information on these systems and how they relate to vendor relationships, be sure to review the infographic coupled alongside this post. Courtesy of Smyyth.