How to maintain the relationship with your suppliers?

How to maintain the relationship with your suppliers?

There are different people in the world that you need to maintain a good relationship, like parents, siblings, relatives, friends, co-workers, customers, suppliers, etc. I think everyone will agree with all above but supplier? Relationship with suppliers are much more complicated.

Some will say you need to keep a good relationship with suppliers as sometimes you may need support from them. Others will say you should be harsh to them since you are the customer and you make the call. Which is exactly true?

There is no true answer.

First of all, you need to play harsh before you show your nice. This does not mean that you should put up a fight with supplier. What you need to do is very simple, put everything on the paper. Suppliers are willing to say anything to win your order so do not trust them unless they are all written on the paper, sign and stamp it. The contract needs to include:
– Payment term
– Product requirements
– Lead-time
– Punishment for delay

Payment term
Payment term is vital to ensure the smoothness of the business and cash flow. Some suppliers will ask for 100% before shipment, which is normal for a customer. However, you shall not approve this in the future orders and get a better payment term, such as 30 days or 60 days after being shipped. You do not have to worry if it will offend the suppliers, because you won’t. Suppliers are doing the same thing to their own suppliers, so just go ahead and get a better payment term for yourself.

Product Requirements
This is a tricky part of the business. Unlikely other terms, there’s plenty of room in the requirements and if you do not play it well, suppliers will find loops soon or later. A complete requirement list shall be made including product appearance, color Pantone code / RAL code, product weight, dimensions, functions, test, etc. Basically, every detail related shall be on the paper. When it comes to the time with defectives, the list will be a solid proof to determine whose responsibility.

Lead-time
Whether your supplier is busy or not, lead-time needs to be guaranteed. Suppliers will also look for more business and they will take in as much as they could, even it’s beyond their capacity. Ideally, you would need an engineer to go there and check out their capacity. You can check the factory size, workers, available machines to tell if they have enough space for the order. Do not trust suppliers’ word on this. Tell them before you place the order that you will not tolerate even a single day of delay. Send the signal to them that you will not be easy-going and you expect them to honor every word on the paper which they signed.

Punishment of delay
Of course, things will happen, like it or not. Even some suppliers are very cooperative and they do have enough capacity for the order, somethings may happen and interrupt the progress. Porosity is getting worse, dimension out of tolerance, painting does not meet the requirement, dying is not good, packing material is delay, color box is not properly printed and needs re-printing, etc, should you just give them a green light because they did not mean to have these? The answer is no. It may not be their fault, but if you just give them away without doing something, it will happen again and again as nobody will learn the lesson. Be harsh and punish them as agreed, and they will find a way to avoid it in the future. Do not feel sorry, but try to think that you are helping them to grow up.

So do you think the answer is being HARSH to suppliers? Not always, sometimes you do need help from suppliers. You may experience:
– Order spike
– Modification
– Order cancellation

Order spike
It is always nice to have a bigger order from your customer, but it will not be pleasant that you customer informs you that he needs 5x more in 2 weeks in a rush season. If the supplier has all machines running full time, how to get so many shipped? Replacing die until it’s heated could take hours to days based on the die size and every press which is not pressing, is wasting money to supplier. Sometimes suppliers will not accept it even you are willing to compensate them for this. This is where good relationship will work. Suppliers are more willing to cooperate and prioritize your order.

Modification
What will you feel when customer informs you that they need a modification but supplier is already making part? You can either pay for the produced parts, or you can ask supplier to find a way to deal with them without paying extra money. Of course, not all products can be dealt in this way but for those which can, it will save you quite some trouble, and of course, gold.

Order cancellation
This is same as the modification. Things can be very formal: you pay for the produced parts; or very comfortable, supplier bear the cost and process the parts without extra cost, such as melting the parts.

Dealing with supplier is an art and there’s no correct answer to all suppliers. Be harsh or even mean when you have to, but do not forget to shake hands sometimes.

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