If your relationship with your vendors consists entirely of a stream of faxed or e-mailed purchase orders, invoices, and checks being sent out, then there’s room for improvement. Building your relationships with your vendors by knowing them better can pay big dividends down the road as your business evolves, says John Peterson, who oversees curriculum design for training company ESI International, which focuses on contract and vendor management.
When you’re negotiating a new vendor contract or it’s contract-renewal time, Peterson advises sitting down and creating a performance plan to discuss with your vendor. The more business the vendor has from you, the more important this step will be for good vendor relations.
Map out all your expectations — for instance, if you place an order, how long should it take to be delivered? When will the vendor maintain leased equipment? Spelling out the details ahead of time should help avoid unhappiness later on. One often-overlooked area to agree on: a dispute resolution process.
“There needs to be time invested in fostering and maintaining the relationship,” Peterson says. “You need to be willing to do it yourself, and you need to find vendors willing to do it, too.”
Part of the vendor conversation should focus on the future. Think about how your vendor needs may change and share that information with your vendors. Next year, will you likely need more volume or perhaps different merchandise? Will your service levels increase? Tell vendors now so they can begin planning to stay relevant and meet your needs.
After the initial kickoff meeting, schedule regular meetings through the year or phone calls at certain milestones in the contract so that both sides can monitor progress and compare actual results against the performance plan. “Then,” Peterson says, “you have the opportunity to fix problems before they become deadly.”
The best of all worlds, he adds, is to build your vendor relationships so that vendors provide you with information on where their business is headed. If you ask where a product is headed, a good vendor will let you know a new version is coming out next year, allowing you to order just enough quantities of a product that will soon be obsolete.
“Some suppliers will give you information about new products coming out, and you’ll be the first one to know,” he says. “They’ll share it because you’ve become a valued customer.”