10 ways to... get the most from your suppliers

Making your business matter to your supplier can reduce your costs and improve the quality of goods and services you buy. Tom Whitney helps you manage your suppliers
  1. Underpin your supplier relationships with contracts. Create a watertight service level agreement (SLA) at the outset which specifies targets, performance standards, penalties and incentives, and get this checked by a legal adviser. If it's an important contract, the cost of hiring a lawyer is minimal compared with the possible expense arising from a poor service.
  2. Understand how your suppliers work. Visit their workplace to see how they operate, to assess their working environment and to cast an eye over the quality of their service. It's also worth getting a sense of any risks that may be involved in dealing with them.
  3. Build good working relationships. Being friendly, honest and reliable in your dealings with suppliers will improve the quality of the goods and services you receive. In return, your suppliers are more likely to offer better payment terms, share market knowledge and update you on changes and innovations in your sector.
  4. Be a good customer. Place orders in good time, be clear about deadlines and pay promptly. You will be giving your suppliers the best chance of achieving the targets you set them in your SLA.
  5. Keep them well informed. If there are changes to your requirements, or if you are likely to be placing larger contracts which will stretch their resources, or if you are facing a temporary cashflow problem, keep your suppliers in the loop. The more they know about your circumstances, the better they can adapt to your needs.
  6. Keep an eye open for opportunities you can pass their way. In a good customer-supplier relationship they will do the same for you. Make your business important to your suppliers and they will work harder for you.
  7. Review their performance. Conduct regular assessments to determine whether your suppliers are meeting the terms of their SLAs. Are you satisfied with quality, punctuality and responsiveness? Meet with them to talk through any improvements you feel are needed. Be willing to change the terms of the SLA if necessary.
  8. Consolidate your purchasing where possible. If you reduce the number of suppliers you work with, you might be able to get discounts for large orders with key suppliers. Are any of your existing suppliers able to provide with you with more?
  9. Monitor deals offered by other suppliers. You're not tied to suppliers, so don't ignore opportunities elsewhere. Get comparative quotes from other companies so you can make informed purchasing decisions.
  10. Terminate the contract if a supplier consistently underperforms. Suppliers that fail to meet your requirements are a drain on your business. If they don't deliver, find someone who will.