Founding partner Andy Palfrey was approached and asked to write a short piece on supplier management for a publication by leading entrepreneur James Caan. The publication was aimed at small and medium sized enterprises and in this piece, Andy shares how the principles developed and honed in the corporate world can be simply applied on a smaller scale.
"A friend recently offered: “Running your own business is great. Except for the customers. And the suppliers…”
Managing suppliers is often a challenge, with many businesses spending huge amounts of time and effort, and seemingly getting very little in return.
Thankfully, by moving from ‘spending time on suppliers’ to ‘investing time with suppliers’, mutually valuable, long term relationships can be successfully developed. Experience shows that simplicity, pragmatism and common sense are often more useful than slavishly following so-called ‘best practice”. So how does one go about getting the best from suppliers?
- Prioritise, Prioritise, Prioritise: understand and prioritise the needs of your business and engage potential suppliers in that order – most important first. Focus on identifying strategic, long term suppliers for goods and services that are most critical.
- Use your head and heart: share your vision for your business and how you’d like potential suppliers to help – both now and in the future. Be frank about how you will evaluate potential suppliers and what they “must” and “should” do. Be honest, realistic and expect nothing less from them. If a potential supplier seems disinterested, walk away. Conversely, be similarly aware of suppliers that make promises that seem too good to be true. Keep applying the same approach throughout the relationship and, most importantly, always treat supplies as you’d like to be treated: it’s nice to be nice!
- Cheap doesn’t equal good: many suppliers work to incredibly tight margins – so think laterally. Don’t try to emulate Gordon Gekko and “beat up” suppliers to simply get a lower price: if they feel you are exploiting them, they are likely to reciprocate when you least expect it. Instead, focus on what truly adds value to your business. Extended credit terms? Quicker delivery? Lower minimum order quantities?
- Nurture the relationship: the most successful relationships are the ones where both customer and supplier recognise its value and jointly focus on growing it. Consider treating your suppliers as you would your customers: it sounds strange but can be an extremely effective way of creating truly symbiotic, long-term relationships.
So, put simply, put down the boxing gloves and invite your suppliers for a cuppa: you’ll both be glad you did."