Supply Chain Confidential: Why Is It So Hard To Work With Suppliers?
Inrepco LLC
* Improving your Sales is our Business * Pairs Suppliers & Sellers Worldwide * Like a dating app... for INDUSTRY
About the Article
In this article, the author highlights the unique challenges and most common mistakes made by business professionals engaged in the supply chain transactional universe. With a particular focus from the seller’s perspective in the industrial arena, current collaboration strategies will be examined for weaknesses, with alternatives reviewed for efficiency and effectiveness. Although intended for the supplier and seller ecosystem, the information and recommendations that follow remain applicable across most sectors, from finance to retail, and from cutting edge and cottage industries to multinational conglomerates.
Why Is It So Hard to Work With Suppliers?
Sellers have been expressing frustration with suppliers since the earliest recorded business transactions. One can almost hear the haggling between the owner of Kongo Gumi, a contractor widely believed to be Japan's oldest ongoing company, and Prince Shotoku, who hired them in 578 to build a temple. “You call that floor finished?” “That’s not the color we specified in the work order!”
On the surface, “Why is it so hard to work with suppliers?” seems like an innocent question. But in reality, and considering the vast scope and influence of business on our lives, the question is as difficult to answer as “Why is it so hard to achieve world peace?”
As it turns out, the answers to both questions have much in common.
What is a Seller?
Are we born with sales skills? An argument can be made that everyone at some point in time has been, and will be, a seller. Think of a child loudly pleading with a parent for a new toy. Or a driver anxiously explaining to a traffic officer why a speeding citation is not necessary. In such cases, the outcome of the “sale” is influenced and determined by innumerable factors. But the essence of convincing someone for something is, at its most basic level, a sale.
For the purposes of this article, we will define sellers as those individuals and companies directly involved with the process of selling goods and/or services in the industrial arena. That covers much ground, from finished textiles and electronic subassemblies to plastics, metals, toys and furniture. All sectors. All segments. All industries and all markets.
Depending upon the geographic region and specific industry, following is a brief list of terms commonly used to describe sellers in industry:
*While not traditionally considered sellers, buyers and procurement professionals are included in the list. This is because those roles mirror a seller’s. In essence, they are sellers to one specific client, be it a government agency or a major retail chain. That “client” is often their own employer.
How Much Money Are We Talking About?
The numbers are impressive. For example, a US-based manufacturer’s representative average base salary is over USD $70k with an additional $30k annual commission. The US wholesale distribution industry alone is worth over $7 trillion and includes about 330,000 companies.?
According to the report Wholesale Global Market Report 2021: COVID-19 Impact and Recovery to 2030 by Research and Markets, the total global wholesale market in 2021 was valued at USD $49 trillion. And it is forecasted to top $64 trillion in 2025, with a CAGR (compound annual growth rate) of seven percent.
The numbers justify exploring and improving how suppliers and sellers do business together. A good place to start is with a review of the current process.
The Only Official Step-By-Step Process for Doing Business
Sorry readers. There is no standardized, universally accepted schematic or “laundry list” for suppliers and sellers conducting business. But we can generalize. A typical supplier seller process might look like this:
This is by no means a comprehensive itemized list of processes and procedures. Rather, it only demonstrates the multiple, varied and interdependent steps in the process. With so many steps, and with so many people and departments involved with the process, what could possibly go wrong? Heed the key takeaway.
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Key Takeaway
There are failure opportunities at every step.
There are failure opportunities at every step.
There are failure opportunities at every step.
The process can be stalled or ended at any point along the way. Bottlenecks and roadblocks can appear at any time. That’s why it is so hard to work with suppliers. And sellers. And service providers. And insurers, bankers, attorneys, shippers, tech support, etc.?
Experience can help avoid pitfalls in business. That can come from years of job training and lessons learned. Seasoned mentors and advisors can help, too. Over time, relationships and networks increase in value, too. And yet, even with these valuable resources, deals can go from happy to sad with little warning.
Let’s look at just the first item from the process list above to get a perspective of the risks and rewards along the path to profit.
Initial Contact
The first category on the list is arguably the most difficult. Why? Because finding the companies that want to work with you is the hardest step in business. In fact, once you find someone who wants to work with you, next steps can be fairly straightforward, as shown in our list above.
Historically suppliers and sellers risked lives and livelihoods to find each other. One example is the Silk Road which for over 1,500 years connected merchants from Asia to Europe. But it was a treacherous journey, complete with pirates, thieves, and plagues.?
Today those traditional routes have been replaced with trade shows and the internet. But travel and in person meetings are still de rigueur for most industries. The purpose remains unchanged; to connect like minded business people for commercial opportunities.
The process of sorting, sifting and selecting companies that want to work with you is daunting. Profit motives can conflict with quality and reliability requirements, legal restrictions, or even ethics. In some cases, unscrupulous players will misrepresent scope of work and performance criteria. Since medieval times, the caveat emptor principle (let the buyer beware) has been good advice for sellers and suppliers, local and worldwide.
Are there specific practices sellers can employ to encourage collaboration with supplier candidates? Yes. One simple technique is to role play. For example, put yourself “in the shoes” of a factory’s management. Ask yourself: What are their headaches from other sellers? How can I become a favored sales representative with them??
Rather than starting the relationship as adversaries, a smart strategy to begin any relationship is to focus on common concerns. When both supplier and seller can agree to avoid known pitfalls, the chances for success increase. In the role play exercise, try playing the devil’s advocate role to uncover potential disasters. Addressing those concerns early during the Initial Contact stage demonstrates good will, empathy and emotional intelligence (and maturity) to potential collaboration partners.?
It’s Getting Easier to Work With Suppliers (And Sellers)
The good news is that companies are addressing and solving the initial contact challenge. Inrepco LLC is one such example. The Arlington, Virginia-based company applies innovative technology with industry insight to enable, simplify and promote opportunities for supply chain and sales channel professionals? worldwide. Described as a “dating app… for industry” the company’s AI-driven private platform automatically pairs suppliers and sellers who want to work with each other.
For more information, email the author at [email protected] or visit www.inREPco.com to learn more about the Inrepco LLC.
? 2022 Inrepco LLC