How to Create a Healthy Vendor Relationship (1.22.24)

The best vendor relationships are beneficial to both parties. These steps can help build a partnership that will translate into a powerful business tool.

Much like a platonic or romantic relationship, a vendor relationship only works when there is effective communication, trust, a clear vision for the future, and an alignment of values. Businesses of all sizes across all industries often find themselves with many vendor choices. After choosing the right one, it is important to invest in that relationship and take steps to ensure that it will develop into something mutually beneficial on both sides.

In this article, we will go over some relationship tips for nurturing the partnership you will build with your vendors as your business grows. These 10 tips include:

• Know what you want

• Set customer service expectations

• Ask for references before committing

• Understand the contract before you leap

• Ask about supply chain interruptions

• Implement regular meetings as a preventative tool

• Make sure your technology aligns

• Evaluate regularly with your internal team

• Grow together

• Knowing when to look elsewhere

1. Know what you want

A healthy vendor relationship begins with choosing the right vendor. Start by clearly defining what you want. Cost is not the only factor here, you must also consider nonbudgetary factors such as experience in your industry, location, length of time in business, and quality of supplies.

2. Set customer service expectations

After choosing a vendor, start the relationship off on the right foot by setting customer service expectations early. Setting clear, firm precedents will save you from having to attempt to establish strict guidelines in the future. Make clear the point of contact, what medium will be used for communication, and how quickly you can expect a response. If you want a vendor that utilizes social media as a communication tool, establish that expectation early.

3. Ask for references before committing

A trustworthy, reliable vendor will have a roster of glowing reviews at the ready. Do not be afraid to ask for references before signing a contract. Specify that these references should come from within your industry if possible.

4. Understand the contract before you leap

Read the contract thoroughly so you understand important precedents, including payment schedules and the extent of the supplier’s obligations. Ask for a clear definition of anything that seems murky and speak up about terms that do not benefit you.

5. Ask vendors how they manage supply-chain interruptions

Every successful business — especially in the growing landscape of e-commerce — should be prepared for interruptions in the supply chain. If you have a contingency plan for shipment delays, seasonal demand, and other issues, your vendor should as well.

Recent examples of how suppliers pivot to handle supply chain risks, such as McDonald’s using imported beef due to coronavirus-related supply chain interruptions, are a key example of how the right vendor partnership can evolve to meet the demands of unexpected challenges.

6. Implement regular meetings as a preventative tool

A calm, regularly scheduled meeting with a vendor to take the temperature of the relationship and discuss upcoming strategies is infinitely more effective than a panicked meeting during a crisis. Keep the lines of communication open with vendors by setting regularly scheduled meetings quarterly, or even monthly, to tackle issues as they arise rather than struggling to clean up after they’ve already escalated.

7. Make sure your technology aligns

If you have digitized your business and rely on automation technology to streamline day-to-day operations, it only makes sense to utilize equally tech-savvy vendors. In addition to using a vendor management system on your end to keep track of all of the partners you deal with, you should ensure that your software integrates with theirs and that your desire to think digitally rather than on paper is harmonious.

8. Evaluate regularly with your internal team

Set regular meetings internally to evaluate vendor partnerships. Address what is working, what could be working better, and delegate team members to take steps in managing those relationships. This is also a good place to discuss potential new vendor partnerships.

9. Grow together

Like all relationships, vendor relationships thrive when both parties can grow together. Ask your vendor how they will scale to meet your projected growth.

10. If all else fails, look elsewhere

Again, like a personal relationship, when a vendor relationship is no longer working and is unsalvageable, it may be time to cut ties. If your preferred communication guidelines are not met, supply chain risks are not mitigated effectively, and the cost and value do not align, look elsewhere. Evaluate your contract for a way out and begin looking for a more mutually beneficial partnership.

If you need assistance managing your vendor relationships or assistance with any aspect of the logistics that power your operation, turn to Resource Logistics Group for help with contract language, pricing, and a free benchmarking analysis. Resource Logistics Group has experience with 3PLs, shippers, and carriers and can help you get the most out of your partnerships.