Every business prioritizes clients’ satisfaction, but often they fail to pay the required amount of attention to suppliers who help them fulfill their clients’ needs and expectations by rendering the necessary products or services. This leads to spoilt relationships with suppliers, which may result in severed business relations and even a downward spiral leading to business closure.

So, what’s the way out? how do you manage your suppliers? What are the necessary tips to keep in mind while handling supplier relations?

The answer to these questions will be discussed briefly in this article, as we will not only just give you clear vendor management definition, but will also introduce you to 12 Supplier Management Tips to help you forge healthy business relations with them.

What is vendor management?

Vendor management means the method you use to know your suppliers’ needs, satisfy them, and retain them.

In other words, anything you do to forge strong bonds with your vendors is called vendor management skills.

Here, we have given you below 12 Vendor Management Tips every Business should know.

1. Know Their Business

One of the best tips to manage vendors is that you must have a basic understanding of their business, their working circumstances, operating procedures, and policies to know their values much better.

Apart from knowing their value, you will also be able to have a better idea of the common possible and potential challenges they face. And last but not least, you will give them deadlines and priorities considering all such factors.

Strong and reliable communication allows you to bridge the professional gap and induce a sense of professionalism and trustworthiness in your business. If they know you understand them better, then their attitude towards you will be more serious, thus making them work with the utmost sincerity.

2. Strive for a Mutually Satisfying Contract

The contract you both sign and how it will benefit both of you play a vital role in vendor management. One of the best ways for supplier management is to make them feel that you take care of their best interests instead of focusing on only yours.

Don’t forget to ask them their needs in order to build good faith and goodwill along with offering them your valuable advice from your business experience to help them grow. Always try to accept certain policies that lessen their risks and burden from your side if possible in order to arrive at a mutual agreement.

In a nutshell, make them feel that they are not only for your business purpose but you strive to make their business as comfortable as possible by adding to their convenience and ease of doing business.

3. Avoid Late Payment

When working with vendors, you must remember that they are also businessmen banking on fluent and regular cashflow for their survival. So, as much importance you give to your cash flow, so do they.

If you manage your payments timely with top vendor management software, it will induce a sense of punctuality and financial security in your relationship with suppliers.

4. Form an Inclusive Bond with your Suppliers

One of the best vendor management skills is to make them feel the importance of their knowledge and experience for your business, which will make your vendor relationships much healthier.

Your vendors must be familiar with specific industry regulations and have valuable knowledge that can benefit both of you, so appreciating their value mustn’t be forgotten.

Apart from providing you with what you don’t have in-house, their advice can also strengthen your business management strategies.

5. Make your Communications Flawless

It is one of vendor management best practices that there must be flawless communication between you and your suppliers. Meeting your vendors, again and again, doesn’t mean that your communication with them is up to the mark and appropriate.

You should fix periodic meetings whether in person or online to know the progress of your partnership. Such meetings can also introduce some potential problems to you, and you both can prepare better to deal with them immediately. The better you listen to them, the better vendor management skills will be.

6. Remember not only Penalties but also Rewards too!

Every businessman wants to know how to manage vendor relations, but most of them tend to forget that managing vendors mean considering them businessmen too and keep their interests in consideration too.

The way you ask for penalties when they leave operations incomplete and unfulfilled in the deal or complete your task late, the same way you should reward them when they fulfill their duty honestly and benefit you.

You must remember that your sweet words and gestures with rewards can encourage them to invest their 100% in their future tasks assigned by you.

7. Plan & Prepare for Contingencies

There are some villains found in every business story like late shipments and weather-ruined plans, leading to a poor client-vendor relationship. Apart from that, natural disasters and equipment failure must be taken into account too. Such contingencies can come up any time, but providing your suppliers with relief in such circumstances can render your relationships with them unshakable.

However, don’t forget to make them clear what they are supposed to do when they face the unexpected. For example, tell them to be in your touch and inform you about their condition and preparations to assure you. In this way, you present yourself as trustworthy and reliable in the adverse situation which encourages your vendors

8. Choose them for a Long-Term

Changing vendors continuously for saving a meager amount of money often leads to overspending and degradation of quality. Therefore, choose a reliable vendor after considering all the factors mentioned above.

The best thing about a long-term relationship is that it gives birth to a sense of trust, responsibility, and the like. And, you will get preferential treatment from your suppliers.

9. Define your Expectations Clearly

As a key vendor of yours, they must know what they are working for, by what time they will finish it, and how their work will benefit your business. For example, if you want them to help you increase your sales by 10% within 6 months, then make it clear to avoid confusion and potential conflict that may arise in the future.

It will inject a sense of duty or responsibility in them for better preparation, making them work more sincerely. In this way, you both will be at the same table leading to fruitful and meaningful conversations.

10. Choose vendor management software

Investing in supplier management software will be a wise step towards strengthening your relationships with them. If it goes beyond your budget, then you can look for free vendor management software, which can help you with supplier relationship management to some extent.

On the other hand, if you go for modern custom vendor management software like Invoicera, coming with brilliant vendor management features, then it will strengthen your relationships with them to a considerable extent.

It can provide you with a single dashboard of the vendor management system making it much easier for you to issue purchase orders to suppliers. Such purchase orders can be converted into bills further.

Furthermore, you can have all your vendor-related information stored in the place. Not only you but your suppliers can be benefited from it too by easily logging into the self-serving portal. Apart from that, your suppliers will have easy access to all purchase orders and reports of the products sold. It means no room left for confusion due to 100% transparency.

Also read: Top 8 Auto Invoicing Software for SME

11. Trust reliable stats to know their importance

Don’t forget that the main purpose of vendor solution is to boost your sales, reduce costs and improve efficiency. So, after the end of each project, campaign, or achieved plan, you must remember to quantify the benefit the system provided your company.

Having so, you will know that you are not prone to overspending, how much the vendor is benefitting you, and the like by providing you with reliable stats. Trust only such trustworthy stats, not words buzzing around you. Always remember, your main aim is to achieve the intended ROI.

12. Keep improving your working with vendors

Apart from business meetings, don’t forget to invite them to other functions you organize in your workplace. Always aim to get feedback from them and encourage them to discuss all matters with you openly.

Such mutually beneficial relationships with suppliers will assist you in receiving all services and products on time from them, thus allowing you to be punctual and regular with your customers/clients and staff by providing them with the services/products required to work and paying them respectively.

Let’s Sum Up

This blog acquainted you with 12 vendor management tips every business should know. Apart from that, it also gave you vendor management definition in simple terms.

Apart from 12 ways to manage your suppliers, I also told you that custom billing software like Invoicera coming with vendor management feature that can help you manage your vendors by allowing them to use a self-serving portal making simple for them to have easy access to all purchase orders and reports of the sold products.