If you are a purchasing agent, business owner, or strategic planner, part of your role includes managing your vendors. One of the healthiest things you can do as a business is take a step back and evaluate your company’s partnerships.
Some vendors you might have been partnering with from the beginning, while others you may be trying out for the first time. As time goes on, some of those alliances will thrive. Others, on the other hand, will become more burdensome due to quality issues, increased prices, or longer lead times. In the end, you can end up putting a lot of work into maintaining alliances that don’t have a good ROI.
Chances are, if you think through your vendor and client lists, you could easily identify a few that could stand to be replaced. Now is the time to upgrade your supply chains and clients, which will ultimately improve your overall business performance.
Here are 3 areas to consider as you evaluate your vendors and client relationships:
Suppliers: If you are a supply chain, look for clients to partner with who are innovative. The more forward-thinking they are, the more they’re going to grow and develop new products. The more they flourish, the more business you have a chance at landing.
Clients: It may go without saying, but you want to work with supply chains that favor innovation. Doing so allows you to expand your offerings without fear that your vendors can’t keep up. Innovative companies provider higher-quality work and can usually do so for less money.
Suppliers: As a supplier, it’s important to keep track of your clients. How much business do each of your clients bring your way? Is there opportunity to tap into more by ridding yourself of some current high-maintenance clients? Which clients get you things on time vs which demand last-minute production?
Clients: ERP software is nice, but it’s not necessary. What is necessary is vetting your suppliers based on cost, expertise, and capacity. It’s important to analyze the opportunity cost for each. What is the return on work capital? How is their order fulfillment? Are they able to handle overflow? Asking these questions can greatly impact your bottom line.
Suppliers: Supply chains can’t do their job if their clients don’t get them what they need. If you hold the assembly line for a big job that is 2 days late, you just lost valuable time and money. It doesn’t matter if you’re a big or small operation, the more proactive you can be mitigating risk, the more you’ll be able to increase ROI.
Clients: Suppliers are supposed to do just that – supply what you need. If they’re not doing that, then your company isn’t performing at its potential. It’s no surprise that most buyers have lost capital at some point due to supply chain disruptions. The more you can mitigate risk, the better off your business will be.
Considering these criteria can result in long-lasting, healthy partnerships. Isn’t that what business is all about?