The Right Way to Manage Vendors and Suppliers

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Why Women Should Stop Trying to Be Like Men in the Work Place-Chispa MagazineNo matter what kind of product you’re selling, if you don’t have good suppliers and vendors your business isn’t going to prosper. If you want your operations to go smoothly, and to keep those profit margins healthy, then you need to have a formal system in place for evaluating and tracking supplier and vendor performance. In this post, we’ll go through a handful of strategies for managing your supplier and vendor relationships.

The first step you need to take in managing supplier and vendor relationships is coming up with some performance indicators. The moment you establish your partnership with a vendor, you need to determine the characteristics you want them to possess and demonstrate to keep a healthy working relationship with your business. After figuring this out, you can set some specific performance criteria for tracking and reviewing your partners on a regular basis. To do this, you need to think about the size and age of the company, their certifications, financial stability, and reputation for service. Of course, everything isn’t going to go perfectly 100 percent of the time, so you also need to decide which criteria is the most important to you. If you needed a shipping company, for example, your biggest concern might be their record for delivering on time, or how many commercial vehicles they own. No matter what your situation is, the first thing you should be looking at is the supplier or vendor’s quality management system.

The next thing you can do to ensure good vendor and supplier relationships is classifying them. This is an especially important move for businesses which rely on a large number of suppliers and vendors. When it’s simply not practical to carry out a detailed evaluation on every single company you rely on, the next best thing to do is rank your suppliers on at least three tiers, based on how important they are to your business. Think about every little component and material that makes up your production process. That 5 gallon metal bucket is important, but possibly not as important as the product you’re filling it with. When you get into a system of ranking suppliers and vendors, managing them more efficiently becomes a natural part of your operations.

Finally, take your time deciding who’s going to call the shots at your business. The person or team responsible for reviewing all the data from your suppliers can often be just as important as the suppliers themselves. After you’ve ranked your suppliers and vendors according to how integral they are to your operation, you can use this as a guide for assigning managers to them. For example, a top tier supplier should be managed and monitored by your chief financial officer, or someone very senior within your finance department. Depending on what you buy from them, you might also want to make people from purchasing, IT, engineering part of the process. When it comes to less important suppliers, you can usually get by with a purchasing or procurement officer with a good background.

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Milo Senalle

Milo Senalle

Managing Editor at Chispa Magazine
As one of the managing editors of Chispa Magazine, Milo Senalle is the go-to man for all things technology, ethical, and financial concerns. Providing laughs with his style of writing and problem-solving techniques, Milo is a voice of reason among the girly staff at Chispa. Married with children, living in Atlanta, he works 24/7 on becoming a man of courage and believes honor begins at home.

Milo Senalle

As one of the managing editors of Chispa Magazine, Milo Senalle is the go-to man for all things technology, ethical, and financial concerns. Providing laughs with his style of writing and problem-solving techniques, Milo is a voice of reason among the girly staff at Chispa. Married with children, living in Atlanta, he works 24/7 on becoming a man of courage and believes honor begins at home.