The best approach for the optimum buyer-seller relationship is the subject of a great many articles. Directworks, a software company that is primarily interested in manufacturing , has produced a number of thought provoking articles, and what follows is another.
The Directworks 5/19/15 blog has an article by Greg Anderson entitles “Are You a Customer of Choice to Your Most Important Suppliers?”. It begins “As a manufacturer, do you treat your critical suppliers as partners or simply as product input costs that need to be managed? … More importantly, do you know how these suppliers perceive your company? Do they consider you a customer of choice? If not, you’ve got some work to do”.
Proficient Sourcing, which supplies supplier candidates to buyers interested in supply chain improvements, finds this issue of vital importance. In the main, our world is split into two: situations where buyers are strictly interested in price, and do not offer an opportunity for a more comprehensive relationship. Department of Defense purchasing seems to follow this model for better or worse. We deal with a number of these organizations, and are happy to do so.
On the other hand, organizations may favor developing a deeper relationship with suppliers. According to the Directworks article there are many benefits to establishing a “favored customer” status with your suppliers. Among them are these:
- Higher quality materials, since the supplier shares your concern about long term consequences of all actions.
- Better service and support—again, the supplier will decide in your favor if some choice has to be made among customers.
- Greater access to innovation and new technology
- Faster time to market
- Lower total landed costs
- More favorable terms
“Suppliers will consistently be there for a customer of choice and will generally demonstrate greater flexibility in challenging times. You will come to view them as an extension of your team. They will reliably provide high-quality materials at competitive prices and help you be more successful at launching new, innovative products”.
If this “customer of choice” situation sounds valuable to you, then here’s the Directworks simple test to find out if you might be one. “Put yourself in the supplier’s shoes and answer a few questions:”
- Does this customer have regular discussions with my company to clarify their evolving needs and expectations?
- Do this customer’s processes and procedures make it easy for my company to deliver excellence?
- When problems occur, does this customer work with my company to resolve issues in a way that is fair to both parties?
- Is this customer willing to listen to our company’s ideas and new developments that may benefit them?
- Does this customer occasionally go out of their way to help our company be successful?
Directworks believes that if you anwer no to two or more of their above questions you might want to rethink how you interact with your more important suppliers.
We have long advocated serious visits to your important suppliers if at all feasible. It is important to observe how they operate, and if the operations appears to be that of a company you want as part of your organization’s important helpers. The visit is but one of a number of things available to you to become a customer of choice.
According to Directworks, “Beyond representing a significant amount of revenue, you become a customer of choice by fostering a greater level of engagement with your key suppliers. Greater engagement is marked by a higher degree of trust and cooperation and is achieved by incorporating some basic principles into your interactions with suppliers:
- Seek their feedback and listen: give them an opportunity to be heard
- Share more information: help them better understand your business objectives.
- Make it easy: be clear, simple, and consistent in your communication
We would add solicit improvement ideas. Keep in mind your supplier is an expert in whatever they do, and probably can improve on many things, given the opportunity.