5 Ways to Better Manage Your Suppliers in 2018

Start the New Year afresh and change your viewpoint by looking at your suppliers as reliable business partners rather than merely vendors.

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Successful relationships with suppliers require recommendations, incentives, metrics and two-way information sharing. Manufacturers should adopt these five methods to manage your suppliers and attain a great working business relationship:

1.      Understand Pricing Throughout the Supply Chain

Ensure you understand the value and cost of materials throughout your entire supply chain. If you do not have a thorough perception of all costs, from end service or product to the raw materials, and the value at each stage and each supplier, a supplier’s value for money cannot be accurately evaluated.

Consider using supplier management software to keep track of your vendors. End-to-end visibility across supply chains can help your business make accurate, fast decisions.

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2.      Supplier Strategies

It is important to understand that supplier strategies flow both ways. Many companies will focus on what suppliers do for them rather than how they could help the supplier to keep costs down. A successful partnership will consider both points of view, and leverages the entire production cost to the benefit of both parties.

3.      Accept Accountability

Businesses should plan appropriately so orders can be made from suppliers with enough lead time and with minimal changes made along the way. If all orders require rush handling, the relationship with your supplier will never work. A contract management system could help you work more efficiently.

4.      Metrics and Service Level Agreements

It is good practice to incorporate applicable metrics and service levels into agreements. Any relationship based on handshakes and verbal agreements is much more likely to be confronted with problems than a partnership where expectations and agreements are clearly agreed upon and established. Consider a contract management system to handle and maintain contracts and agreements.

5.      Penalties and Incentives
Spend an equal amount of time aligning your penalties and incentives. It is perfectly natural to worry and prepare for the worst case for your business and suppliers, such as shipments being delayed or not received, or a factory that grinds to a halt.

Contrarily, the added value created when asset utilisation and production is optimised, runs smoothly and is at its best, should lead to the improvement of relationships with better value propositions for both parties involved.

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