Many suppliers follow a very predictable timeline that will sound familiar to anyone that has been in business for more than a few years.
Step #1 - A salesperson shows up at your door and claims to have the solutions to all of your problems. At first you brush them off but they show up again. And again. Their tenacity and knowledge impresses you. You find yourself thinking, "Maybe they really do have the solutions to my needs?"
Step #2 - After a few more meetings you decide to give them a chance. Their promises to support you and your customers sounds like just what the doctor ordered. They assure you that they will assist in driving sales and increasing your market share. Yes please! They guarantee ongoing product training for your sales people and the list of promises and value-adds goes on and on. This really could be the game-changing relationship you have been looking for! You're optimistic - it will be different this time!
Step #3 - Disappointment. It's not what you imagined. Not at all.
You aren't wrong in trusting and believing that someone new could have a positive impact on your business. After all, if you weren't always looking for new ways to improve you wouldn't be as successful as you are today. So, when these relationships don't go according to our plans we often give up. Or worse, we accept the shortcomings. We sometimes blame ourselves or our ability to "read" people. But like any relationship (personal or professional) we need to work for their success. They never go according to even the best-laid plans.
Albert Einstein said, "The definition of insanity is doing the same thing over and over again and expecting different results." So, if we know this to be true, we must evaluate what we've done in the past, analyze what worked and what didn't, and shift our paradigm of what our supplier/business owner relationships look and feel like.
Managing your suppliers is not unlike managing your team. You need to clearly communicate your expectations, manage those expectations, reward positive outputs and address development opportunities. It's very much like most of the relationships in your life. Without clear communication and respect it's bound to never leave the dock. So, here are seven tips that can help you to effectively rate your suppliers, track their performance, and ultimately increase your overall success by working together!
1. Establish Performance Indicators - create specific performance criteria for tracking and evaluating your suppliers on a regular basis—monthly, quarterly or annually. Your own processes and needs will dictate what criteria you apply. For a business owner who is looking for a battery supply company the biggest concerns might revolve around what is that supplier's on time delivery track record, how many locations they have, their warranty policy and what products are available...
2. Classify Your Suppliers - if you have a huge number of suppliers and vendors it will be a hassle to apply the same survey to each and every one. It's better to separate suppliers into levels based on how critical they are. Evaluate suppliers according to the effect they have on your service in order of importance. By divvying up suppliers into separate categories (such as critical and non-critical or primary and secondary) you can devote more time to measuring the performance of your critical suppliers.
3. Devise an Evaluation Method - there are common techniques for rating a suppliers' performance including evaluation forms, surveys, system metrics, and software applications. For instance, you can craft a survey where you ask your own employees to answer questions and to rate suppliers as they deal with them day-to-day. You can review how many corrective actions you had to issue a supplier, how many products you had to return because the supplier failed to meet specifications or how many customer complaints you received due to a bad service from a vendor.
4. Determine Who's Calling the Shots - selecting and evaluating the critical suppliers may require decision-making from the Owner, President or someone from your senior leadership team. With non-critical suppliers and vendors it may be the Branch Managers who approve the supplier and monitors performance.
5. Maintain Good Relationships - consider your suppliers and vendors as part of your team and treat them as such. Communicate often and openly. Technology is great but don't overlook the personal touch of regular phone conversations or face-to-face meetings. Also, avoid supplier and vendor conflicts by paying on time and honestly addressing late payment issues. Talk to one another about it. Be upfront and transparent. Make sure all parties involved understand needs and expectations.
6. Decide When and How to Raise Issues - as you monitor a supplier's performance you have to decide when to praise them and when to issue a complaint. Show appreciation for a job well done; give a supplier additional business because of excellent performance. A poor supplier should be given a warning and one opportunity to correct the problem. This process is not just about reviewing your suppliers but helping them to improve their performance.
7. Cut Loose Weak Links - no one of course should tolerate ongoing bad service. There may come a time when you have to let go of an underperforming supplier. The relationship with your suppliers is a business partnership and if both parties are working to make sure that the partnership is a success it will be a success. In the long run, having a win-win supplier relationship will be a competitive advantage to both.
The solution lies somewhere in between treating people the way you would like to be treated and getting what you need. No one ever claimed that relationships were easy but they can be extremely beneficial when both parties are open, honest and are consistently thinking of ways to add value to the other.
Just like your parents taught you.