Supplier management is something that many companies overlook. Customer satisfaction is the natural focus for businesses, but it's not the only relationship you should be cultivating, as it is also critical to have a good relationship with your suppliers. Supplier relationship management is a domain in which all companies can excel because it has far-reaching implications. It acts as a method for evaluating your suppliers' contributions to your business and assists you in determining which suppliers have the greatest impact on your performance and ensuring that they are performing well.

Supplier relationship management aids in the development of good relationships with your suppliers and directs the activities you should undertake with each. It's all about putting the right technologies, processes, resources, and tools in place to align the company with its suppliers and build deeper, more committed relationships.

Strategic relationship management is a more sophisticated type of supplier relationship management that benefits both suppliers and buyers. It aids organizations in developing a shared understanding of what's going on, finding productive ways to connect, and resolving issues. However, it is not as well known or officially adopted as it should be. Adopting a decisive strategy for both main suppliers and smaller vendors will result in significant long-term savings.

Here are the top five strategies you can use to improve your supplier relationships.

1. Try to Understand Your Suppliers

Organizations represent more than just the products and services they provide. When planning how to improve your supplier relationships, you must consider the entire essence of what makes your vendor tick. This includes, but is not limited to, their company's mission and value statement, social media activity, philanthropic efforts, business credibility, history, future aspirations and priorities.

Several of these market components can be discovered without engaging in any third-party transactions. For example, you can learn about a supplier's industry credibility by reading online reviews, customer testimonials and industry articles, as well as asking relevant leaders in your network about their perceptions of a potential vendor.

It would be easier to work with a supplier if you have a good understanding of them. You will work through problems and build a stronger relationship if you have a deeper understanding.

2. Identify Internal Risks and Recalibrate

The best vendor relationships begin with a thorough examination of the company's internal operations. It is in your best interests to spot potential supply chain issues early on so that you can minimize threats to your business. Collaborate with your suppliers to identify potential risks in your business relationship and the best ways to address them before they become a roadblock.

Ask yourself three major questions: Do you have the software in place to handle end-to-end supplier correspondence and documentation quickly and efficiently? A vendor-ready technical suite would also make it easier to make timely payments, which is one of the most critical aspects of a successful supplier partnership.

Is it possible to hire a dedicated supplier relationship manager or integrate the responsibility into the position of an existing employee? To ensure end-to-end visibility and remove silos, it could be more appropriate for larger organizations to devote a whole team or micro-department to overseeing manufacturer, retailer and distributor operations.

Have you built a simple vendor management workflow and shared it with the appropriate employees? You could create a flowchart of a standard operating procedure (SOP) that outlines each step in the typical administration of supplier proceedings. The flowchart can be integrated into team project management systems, providing appropriate staff a simple framework to map their jobs, track their responsibilities, and move documents and approvals on to the next person in the workflow.

3. Work on a Solid Supplier Relationship Agreement

Any supplier relationship and business arrangement have responsibilities for all parties concerned. You and your supplier must both be aware of your responsibilities to your clients and end-users. Understanding your responsibilities and maintaining open lines of communication will aid you and your supplier in building a strong partnership that will benefit both of your businesses. Product definition, price, payment terms, delivery terms, and agreement period are all included in a transparent and consistent Supplier Relationship Agreement.

Work with your supplier to create a well-documented contract that meets all parties' needs. As a result, there will be less uncertainty and fewer future conflicts. Both parties recognize and uphold their commitments in a positive contract relationship, and the best way to ensure this is to use vendor contracts that lay out the terms of your relationship.

4. Make the Most of Technology

Technology is, without a doubt, the guiding force in today's world. Companies that want to compete in the sourcing arena must use a variety of technologies. Provide a technology network that encourages and supports productivity and accountability. For example, a vendor self-service portal allows them to review purchase orders, update contact details, send invoices and respond to RFPs. It's a good way to increase accountability in your supplier relationships while also maintaining an audit trail of operations to avoid misunderstandings.

Using supplier relationship management technologies gives you complete and unrivaled insight into your supplier base, giving you a detailed image of how your supply chain is impacted and making it simple to minimize risk.

5. Establish a Clear Communication Channel

Supplier relationship management relies heavily on open lines of communication. Maintain open lines of contact with your suppliers to keep them informed about your goals and plans, provide input, commend them and let them know if anything isn't working in your relationship. When you maintain open lines of contact with your suppliers, they will see you as a partner rather than a customer. They'll also be able to see how they fit into your overall plan and how they can help your company achieve its objectives. That's beneficial to both your and their businesses.

Although it's normal to conduct most of your business from afar, particularly now that remote working is the standard, meeting up with suppliers regularly helps to strengthen your supplier relationship. If that isn't an option, try video conferencing or virtual lunch meetings.

There must be developed networks and a mechanism that promotes efficient communication. Having the right tools in place that enable internal and external teams to collaborate and exchange documents and other information easily would help promote a more open, even-handed conversation.

As for the future, imagine your procurement team spending less time on repetitive tasks and focusing more on supplier relationships and contract management. Digital labor in procurement will do exactly that. Digitization of labor will greatly reduce manual work and allow us to pick up more value-adding tasks. It does this by employing robots. They provide us with rich data and market intelligence that will enable us to improve the quality of supplier relationships. 

Building effective partnerships and collaborations is a skill that can further accelerate improved performance and sustained growth in the industry. Especially in a time when there is stiff competition. We hope with the strategies listed above you will be able to make your business more efficient and build relationships that will stand the test of time.