How to Improve Vendor Relationship Management in 4 Steps
There’s a good chance that you’ve examined some common ways to get to know your customers, but have you taken the time to get to know your vendors?
Your vendors supply your store with the products that your customers want. Additionally, your vendors need you and the contract that they have with your business to keep their own lights on. It’s a mutually beneficial arrangement, but if the relationship with your vendors has soured, it can feel like you’re swimming upstream. In fact, many business owners cite failed vendor relationships as one of the top reasons why small businesses fail.
What are the best ways to improve vendor relationship management? In this article, we’ll discuss the four easy steps that you can take to improve your relationship with vendors.
How to Improve Vendor Relationship Management: 4 Steps
Why is it so important to maintain positive relationships with your vendors?
First, forging a strong relationship offers real, calculable benefits. A positive relationship might mean a better negotiating position in pricing. Your vendors may also be more willing to go above and beyond when there are issues with late or damaged shipments. Additionally, a positive vendor relationship means that they may be more likely to prioritize you in their delivery schedule, ensuring that your store is always stocked and ready for customers.
As an industry-leading point of sale (POS) system provider, we’ve seen it all. We know how important vendors are to the success of your growing small business. Here are the four essential steps that you can follow to create an amazing vendor relationship.
1. Be Clear from the Start
Building a relationship is like building a house. You need to start with a solid foundation! Nothing puts a crack in a relational foundation like misunderstandings. This is why the very first step you need to take when establishing a new vendor relationship is to set clear expectations.
The most crucial part of establishing expectations is your contract. Ensure both parties understand all elements and clauses of the contract. Communicate about any points that are unclear to make sure everyone starts on the same page.
Try to be proactive. Think ahead and anticipate any problems you and your vendor may face. Set up a game plan for how you and your vendor partner will overcome those challenges. It’s this kind of strategizing that gives you and the vendor collaborative energy rather than combative energy.
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2. Invest in the Right Tools
Vendor management is about people, but it’s also about data. Without the right tools in place, you will find it challenging to keep your finger on the pulse of your vendor management processes, and as a result, it will be more challenging to build a trusting relationship with those vendors.
One simple step you can take here is to invest in a reliable retail POS solution. A robust POS software tool like POS Nation’s allows you to track all orders, purchases, and interactions with vendors. You can also implement your POS system with your retail inventory methods. This will give you all the information you need to ensure your vendors meet your expectations and arm you with data that can help you identify possible vendor issues early.
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3. Communicate Consistently
As we mentioned earlier, misunderstandings are poison to any relationship. Many misunderstandings stem from miscommunications or a lack of communication altogether. This is why maintaining open channels of communication is essential to a healthy vendor relationship. Set up regular updates to touch base with your vendors and ensure that both parties are satisfied with the relationship.
Another element of excellent vendor relationships is collaboration. Ensure both you and your vendors understand how the relationship is mutually beneficial. Collaborate on goals, and work together so that both parties can win together.
Lastly, make sure you are upfront about the challenges you are facing with your vendors. Discuss any issues you encounter respectfully and with a problem-solving mindset. Likewise, ensure you are equally open and receptive to hearing about any challenges or pain points your vendor brings to you. Like any relationship, the vendor-retailer relationship is a two-way street.
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4. Establish KPIs
Are your vendors meeting your expectations? Are they helping you go full-steam-ahead toward your business goals, or are they holding you back? The only way to know for sure is to set up and track metrics.
You should set up your KPIs and vendor-related metrics early on, ensuring that you have proper systems in place to track those metrics with reliable data. Your business goals aren’t static, and your KPIs shouldn’t be either. Review your KPIs over time to ensure you’re measuring the things that matter to your business.
The data you receive from these efforts will give you objective and clear information about your vendors’ performance. Though ending a business relationship is never an enjoyable experience, sometimes proper vendor management requires you to gracefully end a relationship with a vendor that isn’t the right fit for your business. Tracking metrics and KPIs can aid you in making those difficult decisions.
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How Can You Improve Vendor Relationship Management?
If you want to take your retail business to the next level, improving your vendor relationships is a great way to get you there. By following these four recommended steps, you should have the tools you need to form vendor relationships based on trust, collaboration, and mutual understanding of goals.
To know if you’re reaching those goals, you’ll need a point of sale system capable of tracking key metrics to help you manage your vendor relationships. POS Nation can help! Schedule a demo today to see how POS Nation can help your small retail business leverage its vendor relationships to get to the next level of growth.