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Resources  /  Blog  /  Supplier Relationships – 3 Steps For Building Strategic Supplier Relationships With A Growth Mentality
Sourcing Education

Supplier Relationships – 3 Steps For Building Strategic Supplier Relationships With A Growth Mentality

May 23, 2019

1. Use A Checklist To Communicate Clear Expectations & Get Supplier Buy-In Up Front

When a business begins to create a management framework around supplier partnerships, it often means amending existing relationships. For any supplier partnership, it’s easier to get a framework in place up front. Before an agreement is signed, it is important to discuss a forward focused approach and to ensure the competitive advantage of the supplier before the partnership progresses. Practically speaking, this may doing the following as part of an award process:

      • Defining task-level metrics

      • Defining the source of truth for Service Level Agreements (SLAs)

      • Defining key performance indicators

      • Defining relationship milestones

      • Defining red flags

      • Defining triggers for cure periods

woman working on her laptop stock image

One great exercise to do with your suppliers is to simply ask: “What are three indicators that this relationship is successful?” “What are three indicators that this relationship needs improvement?” “What are three red flags that should trigger a cure period?” “What are three things that I want my suppliers to hold me accountable for?” Make partnership accountability a two-way street and use this accountability to get buy-in from the supplier partner at the beginning of a relationship. Going through this exercise up-front will create clarity and accountability if and when there are any performance issues later. Answers to these questions should be documented in writing and reviewed as part of a Quarterly Business Review, ideally to track performance and create scalable scorecards.

2. Your best suppliers are true partners, not just sellers

Treating suppliers like true partners will create layers of value. Build trust and loyalty. Make your suppliers feel heard, appreciated and like they are a vital part of your business or organization. Fill them in on changes to your organization and listen to their concerns and recommendations. Numerous studies and surveys have shown companies who treat suppliers as partners rather than operational necessities gain a real competitive advantage in their marketplace.

“Make accountability a two-way street and get buy-in from the supplier partner at the beginning of a relationship.”

3. Pay Your Suppliers On Time (And Clearly Communicate Any Delays). 

Prompt payment means less relationship management by your supplier reps, fewer emails, fewer awkward conversations and more time spent on planning for the future. Timely payment correlates with a warm fuzzy feeling about doing business with you. The easier your business is to work with, the more reliable your business will be. With consistent payment on time will come respect, and even prioritization. Remember, even with strategic partners you are still competing for your supplier rep’s mindshare, because they have other customers to serve. Timely payment is an easy and effective way to demonstrate appreciation. Remember, you may need to ask a favor of a supplier (“Please rush our next delivery!”) that you may not be able to tip them for. By building a history of timely payment, you are banking social capital that can be a source of strategic leverage in future contract negotiations. However, there are always legitimate reasons that a payment might be late (“Our bank got hacked!”, “We just changed payment processors and they said payments won’t be up and running for another 48 hours!”). In these events, clear and prompt communication is a must, so that supplier partner reps aren’t left wondering if they are the ones at fault for not following up with you more frequently.

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