Purchasing

6. Supplier Relations

Your key suppliers are those you spend most with and those supplying vital goods or services.

6.1 Build relationships that both sides value.

• Visit the supplier's offices or factory and get to know the people you deal with.

6.2 Tell key suppliers what they need to know.

• Keep them up to date with your needs.
• Inform suppliers of the time constraints affecting your business.
• Tell them when they are doing well and when improvements are needed (see 7.1).
• Invite them to meetings. Ask them for their views and ideas.

6.3 Make the most of a good working relationship.

• Get longer payment terms and bulk or cumulative discounts.
• Agree long-term supplier contracts or guarantee minimum annual purchase volumes, in return for lower prices.
• Co-operate to improve your goods and services and develop relevant systems and procedures together.

6.4 Even in a long-term business relationship, make sure you keep the upper hand.

• Always know what your suppliers' competitors have to offer.
• Get regular suppliers to tell you how often prices will go up, what will cause them to rise and how you will be notified.
• Underpin key relationships with contracts.
• Check how suppliers perform (see 7.1).