Six keys to building successful relationships with suppliers

April 11, 2005
Building a mutually beneficial relationship with suppliers can be tricky, but if done right, can provide great paybacks for both sides

Building a mutually beneficial relationship with suppliers can be tricky, but if done right, can provide great paybacks for both sides. Tehseen Ali, president & CEO of Verian Technologies, provides the following tips on how to develop a successful relationship with key suppliers:

1. Determine the extent of supplier usefulness and abilities for the entire company. Examine your vendor base and find out where people in your organization are spending money. You may find that two departments are using the same supplier but don't know it and therefore are not benefiting from collective buying power.

2. Periodically review suppliers for pricing, quality and delivery times. Even if you only have a few vendors or already have everything on contract, periodically reviewing your vendor base is necessary. You may find that you are spending more money on certain items but not getting a fast enough delivery time, or that the quality of the product you ordered has diminished since you set up the contract. Periodic reviews also help suppliers to ensure that they are meeting all your needs.

3. Pull reports from your purchasing system to determine if there are additional areas of spending for preferred suppliers. This activity is important when setting up contracts, renewing contracts, or as organizations grow. The more items you can get on contract with preferred suppliers, the better your purchasing power and the more you have to negotiate with for better rates.

4. Provide your user base with an updated list of your preferred suppliers and the items they supply. Place an updated list of preferred suppliers in a centrally located place or on the company network and then send out reminders each quarter or twice a year to the entire organization reminding them of this list.

5. Negotiate contract pricing with suppliers. Make sure you know how much you've spent with each supplier annually and how much you may be able to commit to in coming years.

6. Negotiate vendor rebates if possible. Once you establish contracts with some of your key suppliers, see if you can negotiate rebates such as -- your organization pays suppliers faster (within 30 days) and they give you a 2% rebate each quarter. Success in this area will save organizations as much money as negotiating contract pricing.

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