Article


Earning from the Supply Chain
Strike partnerships with suppliers
By Wes Ball
Date Published: 5/1/2014

Big businesses have a nasty habit of treating their suppliers like … well, suppliers. They take unfair advantage of them. They make them wait and wait for answers. They make them bid for a job. They pay them as little as possible. And, when they complain, they usually find someone else who won’t complain.

It’s not nice to be on the receiving end of that. But larger companies seem to get away with it, because they offer the promise of large sales volume … IF you are lucky.

For small and mid-sized businesses, this approach is deadly. I see all too many small and mid-sized businesses trying to act like big businesses, and it backfires on them … but often without them even recognizing that truth. It isn’t until much later that they wonder why no one good wants to work with them any longer.

Here are some things small businesses should do instead:

Pay your suppliers better than they expect

Now, that should make a few business owners start shaking. It’s one of those things that hits right at the core of a small business owner’s ego. For those who think that it’s “good business” to squeeze every ounce out of every penny, it is painful to think about “giving” money away. But trying to elevate yourself above your suppliers is a dangerous and costly ego trip.

The secret here is that your suppliers are as important to your business’ success as are your employees … sometimes even more valuable. Suppliers are typically the ones who are staying on top of new technologies and new approaches that can help make you more competitive. They are often the ones who are not afraid to tell you some truth about the way your business is perceived to which you have been blind.

The point is: you want to keep them happy and motivated to work for you at the highest level of commitment possible. You should be striving to make sure that your valuable suppliers will always take your call, no matter how busy they are or how small your value is to them relative to other customers.

I always had a philosophy (that allowed me to get great suppliers who would all but kill themselves for me) to always pay them more than they expected. Sometimes I would have to fight with them to accept more. I simply explained to them that my goal was to have them take my call, when I needed them most, and to help me watch out for my best interests. It worked.

My reputation as a fair and appreciative customer got me more than all the “tightwad” ego-maniacs I ever saw could get.

 

Say “thank you” regularly (and sincerely)

How many businesses have you heard sincerely say “thank you” to a supplier? Most would rather bite off their tongues, because that might give the supplier an “IOU” that could be called in some day.

I can honestly say that I have gained far more from appreciation … even when it was not fully deserved … than I ever got from threatening or degrading or simply NOT thanking them. When things were critical and I needed to ask for something extraordinary to save the day, all those appreciative remarks paid off with extraordinary assistance and support from my suppliers.

Try it sometime. They may not quite believe what they are hearing, but it will pay off later.

 

Help them succeed

This sounds almost self-defeating to many business owners. For them, helping someone else succeed means that they must be losing something. Exactly the opposite is true.

Most larger businesses treat suppliers as though it would be a benefit if the supplier went out of business. They act as though creating more stress and less profit for their suppliers will make them better suppliers. Of course, that’s completely absurd.

The first point above (paying suppliers better than expected) is one way to make a supplier a better supplier for you. Another is to refer them to other companies. No, you won’t lose them as a supplier, just because you help them get more business.

After 2 years of trying to get a good referral out of a very happy customer, I finally asked him why I had never received a single referral from him. I asked him if he was not happy with the work we had done for him. He said that he loved our work and that he thought we were fantastic. So I asked him again why he had not referred us to anyone. His response was that he did not want me working for anyone else. He wanted me to be devoted to him, and to him alone.

Believe me when I say that my devotion to him dropped like a grand piano from a third-story window. (Lucky he wasn’t standing under it.)

Of course, you can waste your efforts on some suppliers. They won’t appreciate anything you do. But I have found that those are the suppliers I was not interested in keeping anyway. But I have been surprised to discover how many times I actually created a great supplier through my efforts to help them and to appreciate them more.

This is really no big secret. Reward people well for their efforts, show them appreciation, and help them succeed. It’s the secret to successful influence in almost any aspect of life.

If you depend upon other people for your success (and who doesn’t?), treat them this way and you are likely to find that you have created a great supporting asset that will help you create the future you most desire.

 

Wes Ball (w.ball@ballgroup.com) grows businesses on a contracted basis around the U.S. through management consulting and strategic innovation that helps them stand out and dominate their specific markets.    


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