A vendor provides goods and services that are critical to your business. Regardless of the size or function of your organization, vendors can save your company money and time as well as decrease any unforeseen complications that may arise. It is important to cultivate strong relationships with vendors as they are an essential part of an organization.
Vendor management is the process of overseeing the entire vendor relationship throughout every aspect of operation from acquisition to the delivery of goods and services. A good purchasing manager oversees these relationships and creates a management plan to establish guidelines, due dates and mutually agreed upon goals. Relationship management is a growing focus for purchasing personnel and is integral to the success of a business.
In manufacturing, the vendor and manufacturer are two key entities in the supply chain cycle. An optimistic vendor relationship ensures that the vendor and manufacturer are making mutual decisions, distributing risk and optimizing profit for both entities. This results in a positive and healthy supply chain.
Several factors that elevate vendor relationships in manufacturing are the production of an effective, high quality product, reduced lead-times and providing a product or service at the optimum or lowest cost. In the manufacturing process, an organization should be selective when choosing the right vendor and exercise due diligence by integrating them in their appropriate step or level of production. A transparent and trustworthy relationship is built through effective communication, efficient practices and sharing of company expectations, policies, product specifications and manufacturing processes. A positive relationship could also create opportunities to save your company money through long term agreements and repeat orders. Once this has been established, a purchasing manager can negotiate incentives, such as favorable rates, volume discounts and fair terms in order to increase profit margin.
A positive relationship is a win-win situation for both vendors and manufacturers. It also creates happy and motivated vendors who are more inclined to partner with you for the long term. Ultimately, they want to feel valued as a fundamental asset to your business and an important conduit for overall success.
Corrigan Krause Specializes in Manufacturing Accounting
The Manufacturing Services group at Corrigan Krause can help your team develop more positive relationships with your vendors. Email email@example.com for more information and sign up for our Manufacturing Services newsletter here.