5 Tips for Better Vendor Management
As you expand your business, the need for materials, products and services may grow so you can maintain efficient operations. Now more than ever you must rely on vendors to offer exceptional quality products and services at the rates that are affordable to your company budget. Having a reliable and trustworthy relationship with your vendor ensures that your business receives what it needs when operations need it.
Managing your vendors can sometimes be difficult, especially when relying on third-party suppliers located overseas. Here are 5 tips to leverage your vendor management so you are not left in the lurch with poor quality products, late shipments, or paying too much on your contracts.
1: Evaluate Vendors and Make Them Compete for Your Business
The worse situation for your company to be in is to be stuck with one vendor who has basically seized control of your sourcing. They no longer have to be worried about any competition, so they can charge whatever price they want as they know you are in the desperate situation of accepting their terms. Product quality may also suffer from these draconian tactics.
Compare the advantages and disadvantages of each vendor and select one that best fits into your company’s present and future needs. You want a vendor who has scalable operations that can grow with your company and still fulfill your orders efficiently. Then create a competitive bidding environment so vendors are always working to offer the best prices for quality products while having the knowledge that you’ll go elsewhere for better contract terms.
2: Learn More About Your Vendors
Once you select the vendors you want to work with, you need to have a better understanding of their business operations. You don’t need detailed reports of every little business aspect. Yet understanding their company policies, production schedules and challenges they face can allow you to know their priorities and how they fulfill orders in case you have a business with shifting, flexible deadlines.
3: Maintain the Lines of Communication
Treat vendor’s calls and emails as important as sales communication with customers. Ignoring their messages or pushing phone calls aside to perform other tasks only hampers a business relationship and leaves them guessing over your company’s needs. Be ready to take messages and to give them your full attention. This tactic often smooths over immediate problems before they become serious supply issues.
4: Always Have an Action Plan Ready for Contingencies
Anything can hamper supply shipments. The truck may break down. The shipment might become ruined. The supplier may even be affected by some type of natural disaster that causes them to shut down operations for a certain period of time, or to work on a limited shipping schedule until they can get operations back to working at full capacity. Always develop an action plan to handle short-term and long-term contingencies. Your contingency plan must outline your policies and processes as every vendor should understand what you must do to maintain your company’s operations.
5: Pay Your Vendors on Time
You expect vendors to deliver their products and services on the schedule you provide. The vendors, in turn, expect to be paid for delivered products that are rendered. Paying vendors late is unprofessional and shows that you don’t respect a vendor that has done the work that you expect them to perform. Cash flow problems may affect your company, yet this problem should not be visited onto your vendor or be used as an excuse to stall on giving them the payment they deserve.
A strong vendor relationship allows both you and your suppliers to work together to provide the best products to customers. Taking the time to build on this relationship, plan in advance for problems, and source your company’s needs with the right suppliers allows you to obtain high quality products at the right prices for your budget.