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What are the most important steps to ensure supplier agreements are met?

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Supplier agreements are essential for ensuring smooth and profitable import/export operations. They define the terms and conditions of the trade, such as prices, quantities, delivery dates, quality standards, payment methods, and dispute resolution mechanisms. However, having a signed contract is not enough to guarantee that the supplier will meet your expectations and obligations. You also need to take some proactive steps to monitor and manage the supplier performance and relationship. Here are some of the most important steps to ensure supplier agreements are met.

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Rajeev Sharma

Head Commercial/SCM EXIM Compliance with Project Logistics
Bhavna Razdan

Non-Ferrous & Ferrous Metal Scrap Trader | Managing Partner @ Ansh Enterprises | Sales & Marketing, Business…
Mohammad Mahdi Masoudi

Head of Commercial Department at Fankam Group | Business Consultant and Lecturer | Official Customs Broker

1 Set clear and realistic goals

Before you enter into a supplier agreement, you should have a clear and realistic idea of what you want to achieve from the trade. You should also communicate these goals to the supplier and make sure they understand and agree with them. For example, you may want to specify the minimum order quantity, the maximum lead time, the acceptable quality level, the preferred payment terms, and the expected delivery method. Having clear and realistic goals will help you avoid misunderstandings, conflicts, and disappointments later on.

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Rajeev Sharma

Head Commercial/SCM EXIM Compliance with Project Logistics
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In my opinion, before entering into an agreement with the Supplier it is equally important to have a vigil look at the financial and production capacity of the supplier. After such inspection, one should able to know whether the supplier will able to deliver the commitment. Their financial strength and production capacity followed by past delivery commitment will help to ascertain the commitment to delivery and to avoid disappointments at a later date.

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Mohammad Mahdi Masoudi

Head of Commercial Department at Fankam Group | Business Consultant and Lecturer | Official Customs Broker
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Before the final agreement, the parties must be sure that they have understood each other's aims and objectives as clearly as possible and there should be no misinterpretation.

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Cipriana Acevedo

Senior Manager of Suppliers Engagement en Amstar DMC
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For me works a Service Level Agreement, a tool to set the performance and the results expected, in this way we can help or train them when it is necessary to achieve together the goal.

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Bhavna Razdan

Non-Ferrous & Ferrous Metal Scrap Trader | Managing Partner @ Ansh Enterprises | Sales & Marketing, Business Development & International Trade
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Before entering into a supplier agreement you need to define specific expectations for quality, quantity, pricing, delivery times, and any other relevant factors. The expectations / final terms should be realistic and acceptable to both parties else you heading into being disappointed sooner or later.

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2 Establish key performance indicators

Once you have set your goals, you need to establish key performance indicators (KPIs) to measure and evaluate the supplier's performance. KPIs are quantifiable and objective metrics that reflect how well the supplier is meeting your expectations and requirements. For example, some common KPIs for import/export operations are on-time delivery rate, order fill rate, product defect rate, invoice accuracy rate, and customer satisfaction rate. You should define the KPIs in the supplier agreement and agree on how and when they will be reported and reviewed.

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Bhavna Razdan

Non-Ferrous & Ferrous Metal Scrap Trader | Managing Partner @ Ansh Enterprises | Sales & Marketing, Business Development & International Trade
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Once the goals have been set, we would have to set measurable performance indicators around the set goals which will help to track the supplier's performance against the agreed-upon terms and identify any potential issues early on.

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3 Conduct regular audits and inspections

Another important step to ensure supplier agreements are met is to conduct regular audits and inspections of the supplier's processes, products, and documents. Audits and inspections are ways to verify that the supplier is complying with the contract terms and conditions, as well as with any applicable laws, regulations, and standards. They can also help you identify any potential risks, issues, or opportunities for improvement. You should plan and schedule the audits and inspections in advance and inform the supplier of the scope, criteria, and methods. You should also document and share the results and feedback with the supplier.

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Bhavna Razdan

Non-Ferrous & Ferrous Metal Scrap Trader | Managing Partner @ Ansh Enterprises | Sales & Marketing, Business Development & International Trade
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Use the established KPIs to monitor the supplier's performance and identify any deviations from the agreed-upon standards. Address any issues promptly and collaboratively and do not wait till the last moment to address the issues.

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4 Communicate effectively and frequently

Communication is key to maintaining a positive and productive relationship with your supplier. You should communicate effectively and frequently with your supplier throughout the trade cycle, from order placement to delivery confirmation. You should use clear and respectful language, avoid jargon and slang, and confirm understanding and agreement. You should also use multiple channels of communication, such as phone, email, chat, video call, or face-to-face meeting, depending on the situation and preference. You should also keep a record of all the communication and follow up on any action items or commitments.

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5 Resolve disputes promptly and fairly

Despite your best efforts, disputes may arise between you and your supplier due to various reasons, such as delays, errors, damages, or non-compliance. When this happens, you should try to resolve the disputes promptly and fairly, without damaging the relationship or escalating the conflict. You should follow the dispute resolution mechanism specified in the supplier agreement, which may include negotiation, mediation, arbitration, or litigation. You should also listen to the supplier's perspective, present your evidence and arguments, and seek a mutually acceptable solution.

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6 Recognize and reward good performance

Finally, one of the most important steps to ensure supplier agreements are met is to recognize and reward good performance. Recognizing and rewarding good performance can motivate and incentivize the supplier to continue to meet or exceed your expectations and obligations. It can also strengthen the trust and loyalty between you and the supplier and foster long-term collaboration. You can recognize and reward good performance by providing positive feedback, testimonials, referrals, bonuses, discounts, or other incentives.

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Bhavna Razdan

Non-Ferrous & Ferrous Metal Scrap Trader | Managing Partner @ Ansh Enterprises | Sales & Marketing, Business Development & International Trade
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Acknowledge and appreciate the supplier's efforts when they consistently meet or exceed expectations. This can motivate them to maintain high standards work hard towards achieving the deadlines.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are the most important steps to ensure supplier agreements are met?

1

2

3

4

5

6

7

1 Set clear and realistic goals

2 Establish key performance indicators

3 Conduct regular audits and inspections

4 Communicate effectively and frequently

5 Resolve disputes promptly and fairly

6 Recognize and reward good performance

7 Here’s what else to consider

Import/Export Operations

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What are the most important steps to ensure supplier agreements are met?

1

2

3

4

5

6

7

1 Set clear and realistic goals

2 Establish key performance indicators

3 Conduct regular audits and inspections

4 Communicate effectively and frequently

5 Resolve disputes promptly and fairly

6 Recognize and reward good performance

7 Here’s what else to consider

Import/Export Operations

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