Most professionals don’t need to be told to cultivate relationships with their customers — especially their top customers; however, most business owners and managers I talk to aren’t proactive in managing supplier relationships.
Your top suppliers can significantly enhance your profitability … if they want to. How? One of the most important ways is getting you product to sell when their products are in short supply. Also, suppliers can do other things for you such as rebates, extended payment terms and marketing support funds. Are you starting to get my drift?
Now that we’ve established the importance of building and maintaining strong supplier relationships, here are a few ways to do it:
* Quarterly meetings. We meet with key vendors quarterly to discuss how our purchases stack up versus the previous quarter and the previous year-to-date. We discuss opportunities to increase our purchases and come up with action plans to make them happen. Suppliers can pitch new products, discuss any declines in purchases of some of their products, and get feedback on their marketing programs.
* Get to know the C-level people at each of your key suppliers. When you know the CEO, COO, CFO, etc. you can get favors that others in the supplier’s organization can’t give. I once got the CFO of a supplier to loan my company $2 million to buy a competitor. I don’t think he would have agreed had I not entertained him at The Masters golf tournament the previous year.
* Entertain your key suppliers. As mentioned above, I have taken many key suppliers to prestigious events, nice dinners and good shows, etc. Not only do you build important relationships with them, you stand out. This comes in very handy when you need a favor.
* Don’t take the last nickel off the table. I have seen too many businesses “beat their suppliers up” for the last nickel in each and every negotiation. That is “penny-wise and pound-foolish.” Someday, you may need a favor from that supplier and that will be their time to get even.
* Discount your bills. I have always made it my practice to take prompt-pay discounts. Not only does this add substantially to your bottom line, but, when you need a favor from a supplier or when you need an especially good price, your chances of success are much higher if you pay your bills early.
* Pursue suppliers you want to buy from but who won’t sell to you. In my business there are a fair number of exclusive relationships. At least once a year, we make it a point to contact each supplier who presently is selling exclusively to one of our competitors. Sometimes they accept our overture. If you have a supplier you want to buy from but they are selling to someone else, don’t accept this as being “carved in stone” and pursue them over the long term. When we have done so we have ended up buying from that supplier more often than not.
Jim Sobeck is CEO of New South Construction Supply, a building products distributor based in Greenville with nine locations in the Carolinas and Georgia. He is the author of “The Real Business 101: Lessons From the Trenches.” newsouthsupply.com.
