3 Steps For Building Strategic Vendor Relationships With A Growth Mentality

 
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1. Use A Checklist To Communicate Clear Expectations & Get Vendor Buy-In Up Front

When companies and buyers have to start managing supplier relationships and need to improve performance with unreliable vendors, this consumes a ton of time and resources. Rather than having to chase down the problem, having a strategic approach can pay off in the end. Before an agreement is signed, it is so important to discuss a forward focused approach and to ensure the competitive advantage of the vendor before the relationship progresses. Practically speaking, this may doing the following as part of an award process:

  • Defining task-level metrics

  • Defining the source of truth for Service Level Agreements (SLAs)

  • Defining key performance indicators

  • Defining relationship milestones

  • Defining red flags

  • Defining triggers for cure periods

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One great exercise to do with your vendor is to simply ask: “What are three indicators that this relationship is successful?” “What are three indicators that this relationship needs improvement?” “What are three red flags that should trigger a cure period?” “What are three things that I want my vendors to hold me accountable for?” Make accountability a two-way street and get buy-in from the vendor partner at the beginning of a relationship. Going through this exercise up-front will create clarity and accountability if and when there are any performance issues later. Answers to these questions should be documented in writing and reviewed as part of a Quarterly Business Review, ideally to track performance and create scalable scorecards.

2. Your best vendors are true partners, not just sellers

Treating vendors like true partners will create layers of value. Build trust and loyalty. Make your vendors feel heard, appreciated and like they are a vital part of your business or organization. Fill them in on changes to your organization and listen to their concerns and recommendations. Numerous studies and surveys have shown companies who treat vendors as partners rather than operational necessities gain a real competitive advantage in the marketplace.

 
Make accountability a two-way street and get buy-in from the vendor partner at the beginning of a relationship.
 

3. Pay Your Vendors On Time. Prompt payment means less relationship management by your vendor reps, fewer emails, fewer awkward conversations and more time spent on planning for the future. Timely payment correlates with a warm fuzzy feeling about doing business with you. The easier your business is to work with, the more reliable your business will be. With consistent payment on time will come respect, and even prioritization. Remember, even with strategic partners you are still competing for your vendor rep’s mindshare, because they have other customers to serve. Timely payment is an easy and effective way to demonstrate appreciation. Remember, you may need to ask a favor of a vendor (“Please rush our next delivery!”) that you may not be able to tip them for. By building a history of timely payment, you are banking social capital that can be a source of strategic leverage in future contract negotiations.


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