How to Get the Most Out of Your Vendor Relationships

Does your job require that you manage multiple vendors who provide goods or services to your company?  If so, you most likely know how difficult finding, managing, and retaining quality vendors can be.  Because your vendors are at the heart of many of your organizations day-to-day operating functions, it’s essential that they are acting on your behalf; as reliable, trusted partners for your brand, looking out for your best interests to help your business run more efficiently.

Here are 5 suggested areas to work on to help you improve your vendor relationships:

1. Communication.  Sharing ideas and keeping open lines of communication are critical to maintaining a good vendor relationship.  Great communication leads to negotiation of better rates, helps with setting priorities on work and response times, and creates a mutually beneficial situation for both parties.  When was the last time you and your vendor(s) met face-to-face? If you can’t remember, then it’s been too long.  Most vendors would welcome any opportunity to meet directly with you.  Meeting with your vendors helps to work out any kinks and leads to a better understanding of needs and expectations.  It’s also a good time to review any contracts that are in place.
2. Partnering.  Your vendors should be a trusted source of information and advice for you.  Learning how to best partner with your vendor to leverage and foster that relationship can produce great results.  Your vendors are there to help you, serving as experts in their line of business.  Take time to ask them questions about their work and tap into that expertise.  It will help you to negotiate better for those services in the future.
3. Understanding.  Know that your vendors are in business just like you. Price, of course, will always be an issue, but try not to overlook the fact that your vendors need to make money too.  If you constantly have expectations of low prices, it may lead to a lack in quality or destruction of the relationship. Try asking questions to get to know your vendor’s side of the business.  If you have a better understanding of their processes it may then help you understand the pricing they provide. On the flip side, your vendors should also be very familiar with your business so they can provide you with the products and services that best serve your company's needs and eliminate those that don’t.
4. Negotiation.  Strong arm negotiations are aggressive and rarely end well.  Try looking for middle ground through flexibility and respectful negotiation.  If price is always leading your decisions, then be prepared to get what you pay for.  Lower invoices don’t always mean lower overall costs if the quality and expected result ultimately isn’t being met.  Cutting corners is never a good idea.
5. Requests for Proposals.  From a vendor’s perspective, an RFP is rarely welcomed. Why?  Because most RFP’s are designed as rigid, boilerplate templates that often base the entire process on price.  Your vendors operate complex businesses that offer much more than the final bill, and a one-size-fits-all approach is not telling the whole story.  Vendors should be considered by the overall value they deliver; this approach will almost always save you money in the long term. If you must use RFP’s, consider also conducting phone interviews, or one-on-one interviews so the vendor has the opportunity to discuss details that the RFP most likely missed.  You could be losing out on potential savings, and a really great vendor, without even realizing it.

If you’re already working with excellent suppliers, you should be doing what you can to strengthen that relationship and build loyalty to meet your needs now, and into the future as well.  Your preferred vendors should become trusted partners and part of your supply chain for the long term, helping enhance the efficiencies in your processes.  Along with that, it’s also a smart idea to start identifying a network of alternate vendors you can turn to should your current supplier relationships suddenly fail to meet your needs, or when you need additional vendors to handle emergency situations such as natural disasters.  To start, begin placing small orders with a few selected alternate vendors in each category.  This will then allow you to be familiar with their quality, level of service, response times and pricing - among other things, should you need their services down the road.

Managing multiple vendors for your business can be a challenge.  With a little work and keeping the lines of communication open, you can begin to eliminate barriers and set the stage for a strong and mutually beneficial client/vendor relationship that can be very rewarding for years to come.