Addressing the Costs of crappy Supplier Relationships.

Supplier relationships — and the management of those relationships — can become a deciding factor in the top-line quality, performance and profitability of an organization.

But…

Selecting the right suppliers is no easy task. Adding on to the complexity, once an organization selects the ‘right supplier’ there is no guarantee that the buyer-supplier collaboration will be a relationship of trust, transparency and/or longevity.

In this scenario the purchasing entity has to play a forced hand: drop the supplier and pay the costs of changing or spend resources to develop the supplier relationship.

“To their detriment some companies never look for new suppliers. Other organizations change suppliers far too often” (Hough 2003).

Does anyone else smell a bit of a Catch 22?

There are numerous factors that go into the decision to select a supplier, as well as the choice to change suppliers. Supplier selection is relative to the purchasing body and organization’s situational wants and needs; whether it is a new collaboration, the choice to extend a supplier relationship or the choice to change suppliers.

Whichever way we slice it, defective supplier relationships can be the leaky hole in the bottom of your business’ vessel.

I’ve found in both my personal and professional life, the best way to avoid my pain points from becoming my pitfalls is to confront them before they materialize. So, I’m going to lower the life rafts and help you reach shore.

Let’s start addressing the costs of crappy supplier relationships.

Wasting Time and Money on uncommunicative suppliers.

Your company is most likely already wasting time and money on the management of existing supplier relationships

It’s ok. Don’t be alarmed. You’re running right in the middle of the pack.

“Businesses estimate they spend on average per week around 55 hours doing manual, paper-based processes and checks; 39 hours chasing invoice exceptions, discrepancies and errors and 23 hours responding to supplier inquiries” (mhlnews.com 2017).

This loss- over time has been equated to around 6500 hours, during the work year, that businesses are throwing away by processing papers, fixing purchase orders and replying to suppliers.

These numbers pertain to the average business. Can you imagine the money and time lost when adding a bad supplier relationship into the fold?

READ THE REST OF THIS ARTICLE HERE