Supplier Relations (and beer!)

I like beer. I would not describe myself as a beer snob, but I do prefer craft beer on tap.

Recently, I went to a restaurant with an extensive list of beer on draft. So, naturally, I ordered a beer with my dinner. A few minutes after placing my order, my server returned to tell me they were out of my selection. Slightly annoyed, I selected another beer off the menu. And again, after a few minutes, the server returned to tell me they were out of my second choice. Now I was frustrated. Two items on their menu were out of stock.

Your supply chain is your lifeline. Regardless of how well your operations run, late incoming shipments or defective supplies can quickly put a crimp on your production. Customer orders could be lost causing profits to drop. The companies that provide you the products and services you need to run your business are critical to your success. So why do so many companies treat their suppliers like adversaries?

Too often I’ve worked with companies that try to squeeze their suppliers for every dollar, or push back payment terms to 60, 90, or even 120 days. Conversely, many suppliers often attempt to maximize their profits at the expense of their customers. This short-term thinking on both sides creates a guarded relationship where each try to take advantage of the other. Treating your suppliers harshly may result in some cost savings, but the long-term impact will hurt you much more.

Sooner or later, you will need your suppliers to step up for you. And in those situations, your suppliers will have the leverage. How will they treat you?

Companies operating at a high level of operational excellence usually view their suppliers as an extension of their own business. Information is shared, relationships are formed, and trust is built. You and your suppliers rely on each other to be successful, and both of you can be more successful when you work together.

I use a local company for all my printing needs. I could use an online business and save a little money, but instead I choose to pay a little more and build a relationship with my supplier. One day I was in a bind and I needed something printed within 24 hours. Although it was a small order, and I’m a small customer, my print supplier came through for me.

So instead of treating your suppliers as enemies, treat them as allies. Better yet, take a keen interest in their goals and well-being, share with them your own needs and goals, and buy them a beer. If you build a relationship of trust and respect, together you will help each other succeed. Cheers!

This article was previously published in the January, 2017 edition of VB Front Magazine. Mike Leigh is the President of OpX Solutions, LLC, a performance improvement company that specializes in helping organizations pursue operational excellence through leadership development and process improvement. Contact him at [email protected].