Prime Advantage Blog

5 Steps to Strategic Supplier Relationships

Mike McDonald on Jul 20, 2016 9:08:00 AM

072016.jpegRefining strategy is a never-ending process. Once you get a project, a relationship, a product line to lift-off, there will always be room for improvement and opportunity to tinker with its underlying strategy. When it comes to sourcing, sure we may be getting the job done, but are there areas that can be enhanced or further developed? We don’t just want suppliers who meet requirements or who are merely “good enough.” We strive for true partnerships, mutual benefit and shared skin in the game. We want vendors who can help take us to performance and end products that smash our goals and expectations. So, how do we get there?

1.Do your homework and vet

The best way to avoid a nonstrategic supplier relationship is to not get into one in the first place. Before committing to a new vendor, do loads of research, network with industry peers, consult with experts and find the best fit for your company. The more you set the relationship up for success the greater the chance you will be working with someone who possesses the ability to strategize in your best interests.

2. Explain your business inside and out

If your supplier doesn’t fully understand what you do, how you do it, and why you do it, they will not have access to the necessary components for sound strategy. Be aware that knowing your business at the level you do can actually be a detriment to instilling that knowledge on someone else. What’s second nature to you may fall differently on an outsider’s ears. Try to answer the questions they don’t even know to ask.

3. Communicate and meet regularly

A lot can change from one day to the next so it’s important to keep your vendor apprised along the way. Without the most up-to-date information on your operations, capacity, goals etc., your supplier will have difficulty adding value to your strategies. True partners are always in the know so they can be leaned on for any decision.

4. Get feedback and tap into their expertise

Once your supplier has your business down pat, it’s time to start listening. If you vetted properly then you’ve most likely selected a supplier with capability to problem-solve the same issues you run into. They’ll be able to draw on their experience with other customers and their industry know-how to determine what will and will not work in the united quest to meet your objectives.

5. Be willing to walk

It sounds harsh but what’s harsher is enduring an inferior product and service in the name of complacency. Of course, like any relationship, you don’t want to throw the baby out with the bathwater and you should try to work out the kinks if the overall net is more than favorable. But in some instances, survival trumps loyalty and certain connections just weren’t meant to be. Hopefully it doesn’t get to this point, but your supplier should always be aware that it could if your well-communicated expectations aren’t met.

So if you’re able to focus on these points to the best of your abilities, you’ll be well on your way to much more strategic harmony between you and your supplier.

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Topics: Buying Groups and Group Purchasing Organizations, Strategic Sourcing, Procurement

Mike McDonald

Posted by Mike McDonald

Mike is the Executive Vice President of Business Development for Prime Advantage, a Chicago based Group Purchasing Organization for mid-market manufacturers. Responsibilities include managing business development, marketing, and the GPO's Healthcare Cost Containment program. He’s been a featured speaker, published author, and recognized award winner within the supply chain community.

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