Michelle Rodger: Think about giving something back to your suppliers

Published on Wednesday 28 July 2010 17:06

HOW many of you follow the "treat others as you would like to be treated yourself" philosophy? Good. And how many of you extend that same philosophy to your suppliers? If you're honest, not so many.

Suppliers are often seen as a necessary evil by those businesses that forget they themselves are actually suppliers too. Prices are bartered down, discounts demanded, delivery dates brought forward and when a customer calls to complain they are usually told it was the supplier's fault.

Supplier Relationship Management (SRM) is now an area of expertise: employees are trained to work "collaboratively" with suppliers, to maximise the potential value of these relationships, to discuss risk mitigation and supplier measurement.

But surely it's more about the personal side of a relationship rather than the technical aspects of covering your own backside if something brown and smelly hits the fan? All the software modelling in the world won't eliminate mistakes, and I've found that a friendly conversation and a positive working relationship usually work just as well.

Supplier relationships are critical. They can directly influence financial performance and profitability, product development, manufacturing schedules and delivery pledges.

According to Gordon Dow, founder of the Power Lunch Club, most of us understand the value of looking after customers' needs, and rightly so, to keep them coming back. Yet suppliers, as far as he is concerned, should be regarded and respected as highly as customers.

While many don't yet get it, there are other businesses reaping the rewards of a positive relationship. And there are clear, tangible financial benefits too. Some businesses will ensure prompt payment to secure positive working relationships with suppliers, and some suppliers will agree to extended credit terms. But it only works if the relationship does.

Barrie Brown, managing director of Hawke & Hunter and 99 Hanover Street, agrees many companies fail to appreciate their suppliers, but says his have played a massive role in allowing him to develop the business.

"At a time when the majority of financial institutions are inflexible with business loans, key suppliers have provided greater credit terms which has given us the room to ensure vital business developments happen for us," says Brown. "In that manner, they have received more business and have shown the foresight to acknowledge, as we do, the real value of this mutually beneficial relationship."

Brian Canavan, of Aperture Marketing, sees suppliers as being a key factor in reaching his first business anniversary successfully.

He pays his suppliers on time, but more often than not, on the day of receipt of invoice or service. As a small business owner himself, Canavan understands just how costly and ruinous late payments can be. The result is that when he sources a supplier on time-critical issues, they are more than happy to put in the extra effort to deliver the rush job over the weekend.

Involving suppliers in your business, at every level, should be part of your overall business strategy. Invite them to your offices, introduce them to the team, just like Steven Currie, director of Murray and Currie, who says it sets the foundations for a strong reliable relationship. Currie believes that if suppliers feel needed and respected they will strive to exceed expectations and everyone in the chain benefits.

Some businesses go even further to ensure suppliers are an integral part of the operation. According to Jim Rae, managing director of Elevate You, his business couldn't function without the support of his suppliers. He invites them to strategy meetings, company events and sometimes even client visits. There are quarterly reviews and planning sessions with larger suppliers in order to make swift decisions based on early information.

"They know the business inside out," says Rae. "Some of our suppliers have even used our facilities for their own internal meetings, which shows trust and a real belief in each other's ability to deliver on expectations."

So if you're a supplier and think nobody cares you're alive, just try missing a couple of delivery dates. You'll pop up on their radar then for sure. Or you could just make yourself indispensable by becoming an integral part of your customers' workforce.