Commentary: Strengthening supplier relationships

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Updated May 26, 2020

Regardless of economic condition, having strong relationships with suppliers is a plus. When times are tough, those relationships become even more important.

Rob Garcia, senior vice president of supply management, CorcentricRob Garcia, senior vice president of supply management, Corcentric

While you want to have good relationships with all your suppliers, you need to focus more attention on key suppliers. There are a number of different ways to determine who key suppliers are, but the obvious one is revenue.

Here’s an important caveat: you don’t just want to look at the suppliers you are spending the most with today, but also the ones you think you will be spending significant amounts of money with over the next three to five years. These would include the suppliers that will be growing with you as your business changes.

We are hovering around some significant changes in the trucking industry, specifically in the area of electric vehicles. That may cause you to move into different business sectors and you’ll want to make sure you have established strong relationships with suppliers that can help you make that transition successfully.

In order to build these strong relationships you need to be willing to share your business model and intentions for the near-term future, and you also need to understand your supplier’s business model so that can jointly work together for the good of both parties. If you get to that level of sharing with a supplier, it will not matter if there is a crisis. However, when times are difficult, having a supplier who fully understands your business model is likely to lead to quicker or more creative solutions.

When developing relationships with suppliers, make sure that you work not only with your direct contact, but also take time to get to know people at the senior management level. This not only protects you and helps preserve the relationship if your direct contact leaves the company, but also senior management can often share industry insights and information on the latest technological developments.

Like any relationship, you must work on maintaining a good one with your key suppliers by keeping them up-to-date on your plans and any changes you see coming that will affect your business dealings with them. While you do not need to share every bit of information, it is best to be relatively transparent, and to expect the same level of transparency from them.

What you want is a partnership that will allow you to leverage their knowledge, expertise and experience to help you achieve your goals.

Rob Garcia is senior vice president of Supply Management, Corcentric. In this position, he manages a team of supply management professionals with key responsibilities including the development of strategy, new business opportunities, financial decision making, agreement terms and language, and a portfolio of programs offered to clients.