4 tips that can boost your relationships with suppliers

In just about every product-driven industry, too many dollars are chasing after too few goods. From microchips to crude oil to food staples that are typically well stocked — like wheat, corn and eggs — the items you need to complete your manufacturing processes remain difficult to come by. This puts the suppliers that provide you with these necessities in a bit of a predicament — especially when they have other customers who are looking for the same hard-to-find raw materials that you are.

An approach that can help you more effectively manage this issue is to strengthen the relationships you have with your suppliers. This way, they may be more inclined to prioritize the neeof your supply chain over their other customers', just as soon as the relevant parts, foodstuffs and materials become available. 

1. Invest in strengthening their capacity
The amount of goods a supplier can procure is largely dependent on its capacity limitations — how much the business can obtain or produce at any one time. You may be in a position to help by investing in your suppliers' operations so they have the financial resources to enhance output. This is something tools and hardware manufacturer Stanley Black & Decker has done with its supplier. As Don Allan, the company president and chief financial officer, noted during an earnings call this past February, Stanley Black & Decker co-invested in some vendor projects that will boost capacity for rare earth metals like lithium, which are used for the making of batteries in power tools. Lithium is also need to develop the ion batteries that energize electric vehicles.

Long-term agreements can do a great deal of good to strengthen the relationship you have with key suppliers.

2. Seek a long-term deal
How long have you and your supplier worked together? If all of your contractual agreements have been for a brief period — like a few months — you may want to consider inking a more long-term agreement that is for a year or longer. Long-term agreements help to strengthen the relationship you have with your suppliers by letting them know you're committed to their business. This can incentivize a supplier to attend to your production needs above others who are once-in-a-while clientele or who haven't shown the same level of commitment that you have, backed up by your financial investment.

3. Be open to feedback
Is it possible that some of your production processes are causing you to waste raw materials or use more than is necessary to deliver the same product? Your suppliers may be able to offer some suggestions, but only if they know you're willing to accept their guidance and won't consider their it a slight or somehow undermining your expertise. Making your suppliers aware that you're open to their recommendations on how to minimize waste can make life easier for everyone.

4. Be respectful of their financial commitments
Paying invoices on time — every time — shows your suppliers that you're sensitive to the needs of their business and their ability to run a tight ship. When you're consistently punctual about payment, they're more likely to return the favor by going above and beyond to get the goods that are essential for your profit-making processes.