Is Your Supply Vendor Driving Up Costs?
Irrespective of what business you are in, the vendors and suppliers you work with play a key role in your company’s success. Therefore, it is essential to have a formal system in place to track and evaluate how supplier and vendor performance affects the profitability of your company.
Rather than viewing them as third party agents only to be contacted on an as-needed basis, successful companies embrace their suppliers and vendors as partners in growing their business.
According to Dennis Wright, a management consultant at the SCORE Orange County, “Making sure that this is a mutually beneficial partnership will impact the price you are negotiating today and the quality of service you get in future.” [1]
Developing a lasting relationship with supply vendors
Most companies make the mistake of not developing a relationship with their supply vendor; this is a mistake in the supply chain industry.
“This is the opposite of what you want to do,” says Drew Greenblatt, president of Baltimore-based Marlin Steel Wire Products. “A lot of companies will actually have an adversarial relationship where they hire purchasing people who have on brass knuckles and try to beat up on vendors to get better prices or better terms.”[1]
Instead of haggling on price and possibly soiling a mutually beneficial relationship, you should focus on the quality of service you receive. This translates to more money in YOUR pocket in the long-run.
This is why it pays to have a system for tracking supply vendor performance and possible a rewards program that favors top performing agents. Here’s how you can effectively rate your suppliers and vendors;
- Establish clearly stated performance indicators
- Classify all your suppliers and vendors for easy tracking and comparisons.
- Devise an evaluation method that is free form bias or manipulation
- Maintain good relationships overall
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