Deep in the bowels of my workplace laboratory, I was always tinkering with the ingredients of our “secret sauce,” that proprietary blend of personality, philosophy, and protocols that set us apart. Intentionally or not, every business creates its own unique corporate recipe by virtue of its culture, people, and processes.
Managing the supplier relationship
Make sure your supply chief is skilled at complexity management. She has to grasp how all the internal and external links in the chain impact each other— and how to coordinate them all to land the best deals. For starters, that means forging strong supplier alliances.
Cooperate and collaborate
Your suppliers are trusted teammates who want to help you achieve your goals. That, at least, is how the relationship should work. Smart companies practice “strategic sourcing”— factoring in a vendor’s ability to identify new business opportunities, develop new or deeper markets, provide technological improvements, or add input to strategic decision-making. Involving suppliers in the brainstorming sessions—at the strategic level and when product-related problems flare up—deepens mutual understanding, strengthens bonds, and creates win-win outcomes. Look for suppliers who are positioned to grow with you, who have more capacity today than you think you’ll ever need. (Collaboration works both ways.
Widen the loop
Broaden contact with your suppliers throughout your organization. Regularly put your top execs in the same room as your valued suppliers’ senior management. Consistent contact—beyond purely transactional moments—builds rapport and trust, key ingredients in any valued relationship.
Share your vision
If your volume doesn’t justify preferred rates, bust out the PowerPoint and show your plan to vendors and suppliers. Convince them you’re the horse to bet on. The depth and breadth of our business plan—plus the passion of our presentation—made believers of our partners. They got excited by the extra dollars waiting for the—win, place, or show. In return, we won better pricing than our volume warranted. Caveat: Guarantee confidentiality in both directions. Your suppliers may also be working with your competitors.
Watch out for the friendship trap
Vendors are great schmoozers. They know flattery will get them everywhere. They’ll shower your purchaser with tickets and gifts, take her out to dinner, and treat her like royalty. In time, your purchaser can’t help but feel disloyal for even looking at another vendor’s bids. No matter how careful you are, buddy-buddy relationships can cloud a purchaser’s vision. Coach your purchasing reps on the perils of getting too chummy. Also, implement a “no gifts” policy. Make no mistake—gifts, while given partially in appreciation for past business, are primarily a subtle bribe to influence ongoing purchasing decisions.
Purchasing pointers and negotiation necessities
Handshakes and small talk done, I took a deep breath and headed to the whiteboard. Arrayed around the conference table were top execs from one of the world’s best-known companies who had canceled their evening plans to hear me out. The president had asked me to fly out after I informed him we were putting our account in play. I was frank. Their pricing was a drag on our ability to compete, I told them, and only a significant cost cut could salvage the relationship.
Without insurance, special circumstances can create major heartburn. One fellow I know of imported a shipment of cheese to his McDonald’s franchise in Sweden. The gauge in the refrigerated container indicated that for fifteen minutes, the temperature was two degrees too high. The shipment was rejected, and the franchisee’s cheeseburger-loving customers had to settle for chicken sandwiches for a while.