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Thanks for inviting me to your discussion point.
When we talk about the building the loyal suppliers then first we need to address the core issue which is being a good "Pay Master". As in business you need to care for your supplier commitments so that finally they can be able to meet your demands on priority basis. They best way of doing that is to create some SOP's (standard operating procedures) and educate the suppliers about your company's SOP's.
Secondly if you and your supplier share the common stakes in business then you need to create a one window for all of your suppliers for handling all their communication as most of the problems which can lead to dis-trust arise when suppliers need to communicate with the several authorities of the same company.
Company should also need to categorize the suppliers in the light of their working relationship with the company and the suppliers needs to be made aware of their periodic commitments at the time of Budgeting. It will show your confidence in them and they will work for you by suggesting better scheduling at lower costs to prove their loyalty towards your confidence in them.
One can not simply ignore the importance of new sourcing as it can keep the existing vendors on their toes and can help in negotiating better contracts by showing them the current market offerings. It is the duty of the purchase committee to evaluate all the purchases and compare them with the quotes from the new sources periodically to seek the utility of new sources over existing vendors.
Base line is effective communication is what makes good business relations.
Best Regards.
It all matter of common interests and professionalism. We have to look around new reliable, dependable and cost effective sources for our own interests, business growth and profitability. Same time, we never set aside our existing vendors /sources, keep them motivated and resolve the problems with calmness if any. Old resources are more dependable and would be time tested than new one may be!
Agree with very eloquent reply given by shaheryar malik
Formalising agreements through awarding an MOU or contract keeps the process 'honest and above board'
By listing the essential criteria needed by the business to satis fly the requirements, MOU 's or contracts are awarded to those best equiped to meet the company needs.
Companies / organizations will always sign agreements with their loyal suppliers to have long term agreements. But these agreements are not for ever it is set to a time frame. As such companies tend to there option open should market situation & prices change. This also help suppliers in case the raw materials increase, so suppliers don't suffer loses. So the benifet is mutual. At the same time, suppliers have to understand that being selected as a loyal supplier with a special contract has to be earned and loyalty could not be for ever should conditions change. Therefore, loyalty has to be earned and suppliers has to update the company on market technological and price changes. Suppliers should also understand that the success of their customer (in this case it's the company) is eventually their success and as such should work hard on keeping their customer satisfied. Companies should make it clear to their suppliers that they have the option of doing their own market research to be a breast of the changes whether in technological aspects or price. This will keep also loyal suppliers more active in keeping the company they're dealing with and having a Long Term Agreement with more happy & satisfied.
Well, Managing the supply base is about strengthening relationships that can make or break your business. Earning your suppliers’ trust with honest communication, listning to their concerns and involving them in your processes ultimately makes them a vested partner in your business.
The Procurement function is expected to know where they are vulnerable and bolster their teams for success. Thes teams that put a greater emphasis on qualitative and quantitative supplier data analysis will be able to quickly identify weak spots, risks and opportunities in the global supply chain - improving the strategies and plans needed to manage the suppliers etc:-
A basic level of SRM can be used to manage the supplier relationship ,by developing appropriate styles of interactions to understand and meet the Supplier’s expectations ,Key to develop order management & payment procedures , importantly response on non-approve proposals and payment follow-ups , further develop effective communication and address suppliers day to day issues .
Sourcing new suppliers are core to procurement team in order to reduce cost and improve sourcing management to fulfill timeline; prince variance analysis by vendors will lead to tend new souring in order to reduction in prices and improved service quality by both existing and new suppliers.
tend to agree with points raised by Mr. Sheheryar Malik
A common buyer / procurement approach is to keep existing suppliers happy as well as as continue to look for new suppliers. Well, this is fine.
However, a strategic and tactical buyer approach is to keep existing suppliers happy but also under pressure to perform which works in several ways. Your existing supplier is under constant pressure to reduce prices, delivery times and improve his service level. When you raise the bar you are well prepared to deal with new sourcing and advise them of your requirements. This will ensure that new suppliers come to you with new technology and superior production capabilities.
If you know how to deal and negotiate with both existing and new sourcing, you will be able to add value and build a chain of exceptional suppliers.
All the best.
Shaheryar Malik has made some interesting observations here!
Thanks for the invitation. I totally agree with Mr.Manzoor Alam views.
