How to Find Suppliers Willing to Invest in Your Business
As a strategic sourcing professional, you want to be sure that the money you spend with a supplier delivers value in return. The problem is there’s only so much value you can generate by just focusing on the cost of products and services; in order to find suppliers that will be the best fit, you need to expand your criteria.
Research demonstrates when buyers and suppliers work together, they can unlock significant new sources of value that benefit them both. According to a 2020 McKinsey survey, companies that regularly collaborate with suppliers tend to outperform industry peers in terms of more significant growth, lower operating costs, and higher profitability.
So how can you be sure you’re choosing the right supplier in your initial negotiations? Consider these tips to help you:
Conduct discovery meetings
The best supplier relationships and contracts don’t just happen through a single interaction, says Danielle Salyers, 2nd Vice President of Strategic Sourcing at Allied Solutions. Instead, they develop through a series of repeated discovery meetings.
It’s up to your team to ask the right questions. You already know the objectives of the business unit you’re working with. How will that particular supplier help you meet those goals? Through these conversations, you’ll get a sense of whether your prospective supplier is genuinely interested in giving you the best service possible or simply checking boxes to earn a sales commission.
Perform regular business reviews
Once you’ve selected your supplier(s), you want to be sure you’re receiving the best level of service. One way to determine this is by holding regular business reviews with your top suppliers. Then, create a standard template of items they need to report back to you on.
Review questions may include:
- What are you doing to keep our costs down?
- What innovations or process improvements have you delivered to us in the last two years?
- How do you know you’re a good supplier to our company? And then the reverse, is our company a good customer to you?
Hold suppliers accountable
It all boils down to accountability—not only holding your suppliers accountable but holding your business just as accountable.
Make sure you know the business requirements up front and that you’re effectively communicating them. You can’t beat up a supplier for not delivering on what you don’t even know you need. That’s unfair and not the way to achieve long-term success.
When suppliers see that your company treats its partners fairly, they’ll know you’re a good customer and will want to work with you. There have to be mutual wins in the relationship. Often, a mutual win is a financial gain, though a good partnership will likely yield more than financial benefits.
“When you attack someone looking for the lowest price, you’re not setting yourself up for a true partnership. Instead, I’m looking for suppliers who want to partner with my organization and improve us,” says Salyers. “I want them to be as invested in our success as our employees are. I’ve found that a partnership mindset leads [a procurement team] to be most successful.”
By encouraging a partnership mindset—with your teammates, your fellow employees, and your suppliers—you’ll maximize your team’s and the business’s success.
Ready to level up your procurement team?
Read our article “5 Best Practices for Building Your Strategic Sourcing Team” to learn more.Read More