How To Build Strategic Relationships With Suppliers

Read Time: 4-minutes

I often advocate for building strong relationships in all areas of the business. With your customers, LSPs, and suppliers, and I take the seemingly unique stance that suppliers are way more important than customers.

So why do we focus so much more on our customers?

“They pay the bills Aaron” – okay, fair enough. But lose one supplier and lose all customers, lose one customer and, well, lose one customer.

So, today, I’m going to talk about how we create strong and lasting relationships with chemical suppliers.

It’s crucial to get it right as we need reliable supply chains, competitive pricing, and access to the latest innovations & real-time market intelligence.

But many do find it challenging to establish these relationships, often due to a lack of communication, understanding of mutual needs, and the effort required to maintain them.

I call this the NURTURE step of the CLEAN framework, the final step. I like to break it down as follows:

1. Communication

2. Understanding

3. Long-term commitments

4. Win-win mindset

"Coming together is a beginning, staying together is progress, and working together is success." – Henry Ford.

Clear Communication

• Set Regular Meetings: actively plan these, be it monthly, quarterly, over video, in-person you will know what makes sense. Use these meetings to discuss upcoming needs, potential challenges, and audit how things have gone recently. Consistency starts to build solid foundations.

• Use Technology: if it makes sense, utilise supply chain management software to share forecasts, orders, and inventory levels in real-time. Transparency helps suppliers plan better and can lead to more efficient operations for both parties.

• Develop a Feedback Loop: create a system for giving and receiving feedback. This can help identify areas for improvement and acknowledge successes, making your suppliers feel valued and understood.

Understanding Your Suppliers Business

• Conduct Site Visits: if possible, visit your suppliers’ facilities. Seeing their operations firsthand can provide valuable insights into their processes and challenges.

• Educate Your Team: ensure your procurement team understands the basics of the chemical manufacturing and distribution process. This knowledge allows for more informed discussions and decisions.

• Share Industry Insights: exchange market intelligence and industry trends with your suppliers. This can help both sides anticipate shifts in demand or supply and adjust strategies accordingly.

The Value of Long-Term Commitments

• Negotiate with the Future in Mind: think beyond price. Discuss how you can work together over the long term to achieve mutual benefits, such as scaling production or developing new products.

• Create Joint Business Plans: ones that outline goals, initiatives, and strategies for mutual growth. This formalises the partnership and aligns both parties towards common objectives.

• Leverage Volume for Benefits: commit to purchasing volumes that make it worthwhile for suppliers to offer you better terms. Consider consolidating your purchases to fewer suppliers to achieve this.

Win-Win Mindset

• Innovate Together: Invite your suppliers to collaborate on innovation projects, such as developing new formulations or improving product quality. This can lead to differentiated products and a stronger competitive edge, for both.

• Optimise the Supply Chain: identify inefficiencies in the supply chain. Jointly developing solutions can reduce costs, improve lead times, and enhance sustainability.

• Risk Sharing: discuss ways to share risks, particularly in volatile markets. This might include flexible pricing models or shared investment in inventory. Risk sharing demonstrates commitment to the partnership and can lead to more resilient supply chains.

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So, there you have it.

Some insights into the NURTURE step of the CLEAN Framework. All about nurturing your relationships with suppliers in an effort to improve the reliability of your supply chain. Understand the ethics and sustainability of it, and ensure you have access to the latest innovations and market intelligence.

As always, walk before you can run. If something sounds interesting, try implementing it. But don’t do too much too soon.

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Thanks for reading, and see you next week.

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