The current relationships that companies endure with their suppliers are far from what they were years ago. “Squeezing” your supplier to obtain the maximum advantages without taking into consideration the other party or believing that the provider is a mere recipient of orders has given way to better relationships, based on mutual benefit and collaboration. The English term “win-win” defines this type of relationship which describes how two or more parties share a common interest in problem solving whilst one single party wouldn’t be able to manage it on its own.
Usually the first though that comes to mind in a company-supplier relationship is economic benefits. However, there are many other advantages: strategic, operational, legal, innovation, etc., which must also add value to set an agreement. It’s been demonstrated that a medium-long term relationship that begins with absence of mutual benefit will be predestined to failure and will end before any agreement.
But…How can we foster this kind of relationship? Here are some tips for a successful long-term relationship:
1) Choose a good supplier (partner). We must select suppliers from whom we know their strengths, weaknesses, abilities and experience. It’s important to analyse what motivates them and what they expect from us and our partnership.
2) Transparency in all purchase processes. All processes must comply with the "Code of Ethics and Conduct", which highlights values of fairness, integrity, confidentiality of information and honesty. This will generate a trustworthy atmosphere, essential for a good relationship start-up.
3) Share the agreement benefits. It’s important to have knowledge of the real benefits which both parties have agreed on. Sometimes, it can be very useful to share feedback from the agreement to know which costs and benefit outcomes it has. Mistrust and suspicion that the other party is gaining more from the agreement will take a toll on the relationship.
4) Formalisation of agreements. Any long-term relationship must be under the contract umbrella which includes all conditions that will regulate the relationship between both parties. Clauses for cost reviews, penalties for quality or service failures, causes for the termination of the contract are few of the points that should be compiled.
5) Learn to lose. We shouldn’t be naïve and think that in a win-win relationship both parties will always win equally. During the duration of the agreement there will be moments where we will have to give in so that the other party can benefit and vice versa. This is the best way to build a long-term relationship.
6) Communication. Commercial relationships are managed between people and as such we’re subject to psychological aspects. Communicating during periodic supplier assessments can be a great option to review which points of the agreement are being successful and which ones should be revised or improved.
To conclude, the relationships between a company and its suppliers are, more that ever, a lever for business development. Suppliers have become strategic “partners” that will undoubtedly contribute to the success of the business. Let’s take care of them.