In a competitive marketplace, you can’t afford to keep supply chain vendors who aren’t making your manufacturing or distribution operations better. Here are eight signs it might be time to let a vendor go.
Supply Chain Vendors: 8 Reasons to Ditch Your Current Supplier
They say a chain is only as strong as its weakest link.
Weak supply chain vendors can bring on massive headaches for manufacturers and distributors when something goes wrong. Some of the things to consider when evaluating or periodically re-vetting supply chain vendors include:
- Financial health – do they have the resources to withstand marketplace variables that might disrupt less financially stable suppliers?
- Company structure – do your organizations align well in terms of operations, values, reputation and similar considerations? Are they in compliance with industry regulations and best practices?
- Location – are suppliers well-positioned to serve your company?
- Value – in addition to cost, how does the supplier’s customer service, on-time delivery, special order and other operational merits stack up?
- Capacity – is the supplier able to meet current projections? If your company grows, will they be able to meet bigger and/or more frequent orders?
- Collaboration – are orders processed correctly? How responsive are they? Do they communicate changes in status, capacity, pricing and policies to their customers effectively and in a timely manner? Are they responsive when something goes wrong?
Just because your supply chain vendors pass these tests once doesn’t mean they’ll always be the best partners. Changes in the marketplace, company leadership, financial practices, risks taken – any number of factors may weaken one of the links in your supply chain network, which could in turn negatively affect your company. Here are eight reasons that you might need to re-evaluate or replace a vendor.
How Do Your Supply Chain Vendors Score on these 8 Tests?
1. Creating economies and efficiencies.
Strong partners will help identify ways to make your business operations more economic, efficient or productive. They understand that they are uniquely positioned to see your business from a different point of view and will use the vantage point to offer suggestions for improvement.
2. Adding value.
Strong partners won’t stop at contract fulfillment. They will take advantage of opportunities to create or expand on the added value they build into customer relationships.
3. Sharing industry news and information.
If your supply chain vendors view your success as connected with their own, they will make sure you are aware of industry rumors, news, advances and technology. Strong partners realize that the investments they make in your success come back to them in sales down the road.
4. Demonstrating consistent, transparent pricing.
If you’ve signed on with a vendor whose pricing changes frequently or whose key value-adds require that you pay additional fees (especially if you believed they were included in your contract), it could mean you’ll go over budget to get what your business really needs. Make sure you read contracts carefully, ask questions, and ask for clarifications when it comes to what’s included.
5. Cooperating during negotiations.
We often think of negotiating as a battle; however, the vendors who are most likely to invest in your company’s success after a contract is signed are usually those who are willing to work collaboratively with you during the negotiating process. They understand that one size does not necessarily fit all, and they are willing to work with you on a contract that will benefit both parties.
6. Making things easy to understand.
It’s always advisable to have contracts reviewed by a legal expert before you sign them; however, that doesn’t mean you should have to have an advanced degree just to understand the terms, conditions and technicalities contained within them. Strong partners create trust by making contracts, technical information, instructions and other materials easy to understand.
7. Spelling out the important details.
When contracts and other documents require additional explanation, strong partners are responsive and happy to provide you with clarification and additional information. Vendors whose representatives are hard to reach or who express frustration with your questions during the negotiation process, avoid specifics or don’t seem to understand your business needs when discussing the terms of your agreement aren’t likely to do better after the contract is signed!
8. Understand that value trumps price.
The supply chain vendors interested in bringing value to your business may not have the lowest price. However, when you consider the intrinsic value they bring to the table as a partner who truly wants your business to succeed, and sees their own success inextricably linked with yours, price may not be the most important consideration in choosing a vendor.
The best indicator of future behavior is past behavior. As you evaluate the previous performance of your supply chain vendors or their performance during negotiations, you can discover which suppliers are truly invested in helping you grow.
You might also like: Increase Supply Chain Business Revenues by Improving Supply Chain Processes
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