How to Get the Most from Vendor Relationships
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Relationships with suppliers can play a critical role in your company's success. Actively managing these vendor relationships can help ensure that your business runs smoothly, and it may even give you an edge over your competitors.

Keeping lines of communication open and setting clear expectations can equip your vendors to offer better quality, faster turnaround and more innovative solutions for your customers. Use these suggestions to help build fruitful vendor relationships:

Share your priorities

Clearly explain your current business needs and goals so suppliers can be in a better position to help you meet them. Share big-picture priorities, such as responding to important industry trends, as well as shorter-term objectives, such as product launch schedules or expansion plans. In return, your vendors may volunteer ways that they can help you meet those goals. For example, if you are a retailer planning to open a second store, a software vendor may suggest new tools that make it easier to run multiple locations.

Be willing to collaborate

Many vendors have unique expertise that can help your business be more successful. Remember, you've chosen to work with them because they can produce a product or service better or less expensively than you can in-house. Rather than finalizing a plan and shopping it to various vendors, consider bringing some into the planning process so they can offer their suggestions. For example, you might ask a key parts supplier to weigh in on a new product design or to offer ideas for streamlining your manufacturing process.

Understand fair market price

Strong vendor relationships may involve more than just getting the lowest price. They should be treated as long-term partnerships that can yield better service and higher-quality work. Look for arrangements that offer the most value for your dollar. Request bids from vendors other than those you normally work with to get a sense of fair market price and examine the value that each vendor provides. You will need to respect your budget limitations, but be ready to pay more for quality.

Clarify terms in writing

Provide a clear schedule for when a contract begins, ends and renews, and state the details of compensation. If disputes or problems arise, you have a framework for solving them that both parties have agreed to. Because poor performance or missed deadlines from a vendor can devastate your business, work with your vendors on larger projects to develop a series of project milestones, deadlines and quality standards. Spell out reasonable penalties for when a vendor falls short of goals, such as a percentage reduction in fee.

Be candid about performance

Regularly provide positive and negative feedback to your key vendors. If a vendor isn't meeting your expectations — whether related to quality, deadlines or otherwise not fully fulfilling the terms of your arrangement — offer constructive criticism that can help improve the quality of future work and make the vendor feel more invested in your company's success. Likewise, praising good performance can help build great vendor relationships, loyalty and develop key vendors into true partners.

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This information is general in nature and is not intended to be legal, tax, or financial advice. Although Regions believes this information to be accurate, it cannot ensure that it will remain up to date. Statements or opinions of individuals referenced herein are their own—not Regions'. Consult an appropriate professional concerning your specific situation and irs.gov for current tax rules. Regions, the Regions logo, and the LifeGreen bike are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.