After years of emphasis on making procurement “efficient” by focusing on cost, it seems many companies are waking up to what is really a very old truism: relationships matter in business. Sometimes it’s quality that matters more than quantity.
It’s easy to think of a vendor or supplier as a merely a “commodity” conduit. However, contract management shows us that actively managing contracts means being active in managing business relationships.
An article on www.executiveboard.com recently pointed out some of the advantages of treating suppliers more like partners. In the post Why You Should Make It Easier for Suppliers, Tanvi Patel cited these key reasons to be on good (or best-possible) terms with your supplier: “Firms that are viewed as a ‘customer of choice’ by their suppliers will often enjoy preferential treatment, such as greater access to suppliers’ scarce resources and innovative ideas, and better service,” writes Patel.
From personal experience, I’ve seen this happen too. I once worked on a fulfillment campaign (as a contract project manager) and our team had a great vendor who worked diligently to come up with incentive items for corporate customers. We worked hard, too, to respect the vendor’s turnaround times, always trusting them to know best when something could be delivered or done, and adjusted our internal expectations accordingly.
In the end, being a “good customer” for this vendor paid off. When faced with a sudden cut in our budget, the vendor bent over backwards to find us new choices for items that fit our new, reduced budget. In the end, we were able to fulfill at the same pace with just a few changes in inventory.
In Patel’s article, he recommends three ways to be a “customer of choice.” These are 1.) Assess what makes your company attractive to a particular, 2.) Re-evaluate demands that may drive up the suppliers “cost-to-serve” and 3.) Treating the supplier as a partner/collaborator.
These may not be groundbreaking observations, but remember, it’s about the attitude of the relationship. Thinking of vendors as potential partners and collaborators means that you are establishing a broader two-way street of communication.
That can turn out to be a real advantage when an organization can’t find an easy answer in-house, or is looking for knowledge outside of its in-house resources. This, in turn, could turn a routine vendor into a strategic partner.