Thinking Several Moves Ahead: Long-Term Partnerships With Suppliers [Podcast Ep12]

 

Why are long-term and specific partnerships with suppliers more and more important?

What we’re really talking about is relationships and how important great relationships are with your suppliers.

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Your #1 barrier to doing business in China

It’s really hard to communicate when dealing with the Chinese.

And if you thought it was hard to communicate with suppliers at the trade show, just wait until afterward.

There are so many topics you have to discuss and deal with as you progress through an order or developing a product, that misunderstandings, misinterpretations, or any other communication difficulties become a huge barrier.

That’s why building good rapport with a supplier is essential because it’s going to get more challenging with time, not less.

Getting suppliers to take you seriously

Whenever you meet with a supplier for the first time, don’t start talking about product and price.

I tend to do bit more vetting of the supplier first by asking what the MOQ’s are, what their Incoterms are, are they shipping FOB or Ex-Works, what their lead times are, what markets they ship to, and so on.

I want to get a sense of their expectations. Only after that do I start talking price.

Opening your conversations this way makes them feel like you know what you’re talking about.

They’ll take you more seriously, warm up to you, and really be much more receptive to continuing the conversation and developing the relationship.

If you open with price-talk you’re going to sound like an amateur.

Remember, they’re dealing with thousands of other people and businesses asking about the price.

Suppliers lose interest and they won’t want to spend their time sharing with you.

Even simple things like asking about the extra features on a product, or asking about unique products or unique features…

Will show them you’re taking a serious interest in them, on top of educating you and giving you greater insight into their capabilities.

And here’s another secret tip:

Ask about the price of samples.

These suppliers have thousands of people coming to them at trade shows asking for free samples.

Put yourself in their shoes for a minute…

Wouldn’t you want to focus on people who are willing to pay to get samples?

Getting suppliers to show you the “good stuff”

Suppliers always have “under the counter” products.

The brand new stuff that’s experimental, or coming out soon.

They might have them at the trade shows. Or not.

But they’ll only show it to people they feel comfortable with.

Other questions I like to run through

• Are you a manufacturer or a trading company?
• What are your top-selling products?
• Who are your top customers?
• What countries do you sell to?
• What’s your production capacity?
• What certifications do you have?
• What are your payment terms?
• Do you accept Letters of Credit?

Get them into a conversation. If they’re proud of it they’ll happily share the information with you.

Now, we still haven’t answered the question “WHY are long-term partnerships important?”

That’s coming up in a minute but I wanted to give you some tips to help develop that initial rapport with a potential supplier.

It really boils it down to simple human relations.

If you meet somebody and you show interest in them, talk to them, and get to know them by just asking questions…

You learn about them, they learn about you, and it just builds a comfort level and builds the relationship.

Understand, you can just as easily ask these questions via an email.

But guess what’s going to happen:

Like I said earlier, these suppliers are dealing with thousands of people who want to buy from them.

They’ll take one look at your email and go, “Oh, there’s more work I have to do.”

No one wants more “work.”

And you know, as much as you’re trying to assess the supplier and understand them…

They’re also trying to qualify and grade you as well a customer.

• Are you a serious buyer?
• Are you gonna be a good customer?
• Do you have the potential for long-term business?

Why are long-term partnerships essential?

For your long-term success, product differentiation is more important than ever.

If you want to sell products that set you apart from your competition, you can’t just have a buying-and-selling relationship with your suppliers.

You have to collaborate with them.

And in order to drive innovation, you need to give them feedback from your sales and marketing teams.

With this, you’ll figure out ways to improve your product.

Better products mean more sales for you.

More sales for you means more orders for the supplier.

So it’s a win-win all-round.

And remember, the supplier is developing and innovating products, from their end, all the time.

A good relationship with them means you’ll get “first dibs.”

They’ll show it to you first, and you might be first in line to buy the product.

That’s a huge competitive advantage for your business.

Operational efficiency

As you continue to work with a supplier, they understand your needs and learn to think like you.

They know your operating procedures, how you ship, who your agents are, how you do documentation.

This takes a lot of work off your (or your team’s) plate.

It’ll also reduce lead times and minimize (or even eliminate) production delays.

And get your stuff delivered on time, every time.

This one benefit alone is enough to rest my case.

But imagine changing suppliers every few months.

You’d have to build that relationship from scratch every time, and “train” them in all of the operational activities mentioned.

The less you have to do that, the more time you can spend on the stuff you’re best at, like research, marketing, sales, and so on.

You will also find, if you invest in building your suppplier relationship, that they prioritize your orders for production.

And if they are getting close to full capacity, they’ll be more honest with you and try to help.

Getting better samples

In my experience (and I’ve been doing this 20 years now,) the sampling process is the single biggest delay in getting a product to market.

I can’t stress enough the importance of getting suppliers to put the right amount of time and energy into creating samples.

Guess what, though?

Just like you have high expectations, so do the other businesses your supplier works with.

And they might need to produce several iterations of samples for each client.

It’s a huge cost and a time-consuming process for the supplier.

However, if you have a good relationship with your supplier, they’re going to prioritize you.

It’s going to be much easier to communicate your needs to them.

Better communication = better samples…

Better samples mean you need fewer iterations…

Fewer iterations mean you can start production faster…

You get my drift?

It’s these “hidden” improvements to your sourcing process that will give you an edge over your competitors and keep you in business for decades (as opposed to years.)