Managing relationships with Suppliers, Customers and Distributor

Managing Relationships with Suppliers

Growth of business all customers have to depend, directly or indirectly, on good and reliable suppliers. Apart from their expectations from the supplier the customers also need to be loyal to them so as to strengthen their relationship. Therefore, customers should work on building a strong and long-lasting supplier relationship as they do with their own customers. And it is not a complicated process.

The positive customer-supplier relationship begins with the initiative of the supplier to demonstrate his sensitivity to the customer’s needs. A customer always vouches for the conditions of his business deal with the supplier and likes to be honest with them to have a smooth flow of business. But many non-serious suppliers sabotage the deal in the beginning only by making the customer struggle to even getting a relationship started.

The lapses and diversions on the part of the suppliers can affect their relationship in many ways as given below:

• Competitiveness: Customers assess the supplier through competition based on the pricing and quality of their products, its reliability, its technological background and industry trends. These factors affect the deal.
• Satisfaction: The customer expects overall attention and convenience in all departments to ensure smooth fulfillment of his needs. This includes quality, timeliness, ease of access and commitment of conditions. He wants to believe that the supplier cares for him.
• Finance: Suppliers have to be ready for providing financial advantages as loan, extended terms on purchases and postponement of debt when demanded by their loyal customers particularly at their growth stage or when they are into a financial crisis.
• Innovation: It is difficult for the supplier to divert the customer from their quality assessment. Customer knows and lives the products more than the supplier does, as he is working on them and is in a position to suggest innovation and development for the products.

On the other hand suppliers also have a right to get their needs met as they are ultimately motivated by profit. They want to be known as the best in their deals so they count on customer loyalty and satisfaction at all levels which translate into direct benefit of both of them. Therefore it is only win-win relationships between them in all stages of the customer-supplier chain to produce total satisfaction. It should be remembered that a customer assumes his name only in relation to his supplier. As such in order to be a valued customer to suppliers, here are a few things he should do:

• Provide adequate flexibility. The customer should try to give suppliers as much flexibility as possible for them unless there is a compelling, competitive reason not to do it. Unreasonable demands should be avoided. This tendency also connects to quality production.
• Payments always on time. The customer should always negotiate for favorable payment terms before the deal is initiated. But once the order is placed, the commitment should be honored. Any problems arising in this regard should be properly dealt with to maintain the goodwill and benefits to earn.
• Share information. The customer should be communicative by keeping the suppliers aware of what is going on in their organization. He may share some of the key strategic information with them. Frequent and open communications are important in understanding each other’s expectations. All relationships begin with self.
• Personalize the relationship. The customer should always be in contact with the supplier and visit him frequently, not necessarily only when it is needed. He may also be invited to attend and give suggestions in some of their strategy meetings. Methods of improving business may also be discussed. Sharing of knowledge, opportunities, service benefits, software compatibility etc. would be beneficial for both.
• Be a demanding but a valued customer. Being a demanding customer can just be fair. The customer should state his demands clearly and tell his supplier to hold his agreements. At the same time as a valued customer he must always cooperate with him to keep up his commitments without embarrassment. Sharing knowledge, service benefits, media exposure opportunities, software compatibility, efficiencies etc. would add to enhance relationship.

Need of Relationship with Customers

Building relationship with customers in current market trends is the most important aspect that an organization should focus on. Distinction and eminence are now most sustainable and affirm for which developing good relationship with customers is must. Some of the substantial outcomes of building a quality relationship is explained below by which need of relationship with customer are insight:

• Lead to Customer Satisfaction: Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. It can only be attained if the customer has an overall good relationship with the supplier. In today’s competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with customer.
• Better Customer perceptiveness: As the customer lengthens to deal with a supplier, the supplier tends to explicate a better insight of customer’s needs and expectations. By this a high level of relationship can be developed between them. This will result in selling more products and retain the business with the customers which finally will lead to profitable business.
• Lead to Customer Loyalty: Customer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the supplier and re-visits the organization for business deals, or when he is tended towards re-buying a particular product or brand over times by that supplier. To continue the customer loyalty the most important aspect an organization should focus on is customer satisfaction, hence it can be said that customer loyalty is also an outcome of good relationship.
• Chances of getting referrals: It is always a cost-free advocacy by customers to provide referrals to supplier when they feel satisfied and encouraged and when they have a healthy relationship with customers. These referrals or customer’s reference of other customers acts like a piece of cake for suppliers as there is no cost and struggle involved in this. This could be treated as the best outcome of quality relationship what a supplier can think of.
• Lead to Customer Retention: Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business and this only possible when there is a quality relationship between customer and supplier. Usually a loyal customer is tended towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business.
• Cost to serve is low: Cost to serve existing satisfied customers is always very less for the supplier as they know and understand customers. Customers never come back with complaints and queries because they know the actual business flow and completely rely on the relationship with supplier.
• Growth in revenue: When suppliers have healthy relationship with customers the revenue of the organization always increases as customers tend to buy more and more. There is possibility that a satisfied customer seeks to buy special category of related products apart from the regular ones from that particular supplier. For instance, if a satisfied and loyal customer has a home insurance from an insurance company then there are positive chances that he could also insure his property and car also if he is fully satisfied with the services of that insurance company. This will definitely result in growth of business.

Managing relationships with Distributor

Supplier relationship management (SRM) is one area all businesses need to become good at because it can have significant effects. In fact, adapting a more strategic approach with key suppliers can have immense long-term benefits for companies. A 2013 report from management consultancy Efficio Consulting showed that there are very few companies that are enhancing supplier relationships, despite the fact it’s not easy to find reliable suppliers. As they play a major role in your business, it’s crucial that you do everything you can to keep them on board and happy. Look at them more than just someone who supplies goods and/or services. They must be your allies because the kind of relationship you have with them can influence your success.

Strategic Relationship Management (StrRM) is an advanced form of supplier relationship management that is widely considered advantageous for both suppliers and buyers. It’s this strategic approach that helps companies develop mutual awareness of what’s going on between them, find effective ways to communicate, and resolve issues efficiently. Here are just some of the benefits of having a solid relationship with your suppliers:

Take Advantage of Great Deals

Good supplier relationships can mean that you can avail of discounts and other attractive deals. Good payment discipline can prompt them to offer you a cash discount, for example, if you settle the invoice within 30 days. Finally, they can decide to slash off a certain percentage of the goods they send you.

Customer Satisfaction

Another important result is customer satisfaction. Because you are able to deliver goods and services on time and free from defects, your customers will enjoy doing business with you. They will feel that their money is well-spent.

Timely Delivery of Quality Materials

For you to meet your quote and provide excellent service to customers, you need to have the things you need on time. What’s great about having an excellent relationship with your supplier is they will prioritize you. They will deliver the goods ahead of time. In addition, they’ll make sure that you get the best goods. However, the benefits far extend to the production stage. You avoid returns, manufacture products quickly, and produce quality products that your customers will love.

Smooth-sailing Production

It’s easy to start the production phase when you have everything you need. And since you’re assured that the raw materials are of high quality, the risk that you will have to stop production or reject finished products, both of which result in lost revenue, is greatly lowered. You’ll meet your target without difficulty and will enjoy easier restarts after office relocation or other major changes to your company.

All interactions with your distributors and you will be well on your way to positive business growth.

• Meet with your distributors in person. While telephone and email are effective means of communication, they should not be your only means. By scheduling time for face-to-face meetings with your distributors you are sending the message that they are important to your business.
• Keep communication open. An open line of communication is essential in any relationship business as well as personal. It is important for your distributors to know that they have a voice that is heard. Likewise, you need to keep them informed about what is going on in your end of the business.
• Support your distributors by participating in their meetings. Not only will this keep you informed about the inner workings of their end of the business, but it will show that you care enough to be involved. Participating in meetings will also give you the chance to voice your opinion and take a more active role in the business.
• Attend events sponsored by your distributors. This shows your support for their business and is an excellent opportunity for networking. In addition to strengthening your relationship with the distributors you may also be able to build new business relationships.