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5 Tips for managing your suppliers

Suppliers are an essential part of some company's operations, since they supply us with raw materials or provide us with services that help our business run smoothly.

In a world with so much availability and competition in the field of business, having managed the suppliers that provide us becomes a necessity to know the quality of products or services that make up our organization, as well as the evolutionary costs of maintaining the relationship with these suppliers. The action of managing, recording, tracking costs, validating the quality of the products that supply us and maintaining a healthy relationship with suppliers is what we call supplier management.

5 Tips for managing your suppliers

Why is supplier management important?

Supplier management is of vital importance to your organization because it allows you to analyze in detail the most important attributes of a supplier for your organization. These attributes can be: quality/price ratio of products, delivery times, service quality, availability to your organization's requirements, among others.

Suppliers have an important impact on the economy of organizations, since purchases from suppliers add up to a considerable percentage of the production costs of any company. Maintaining an effective supplier management allows you to constantly evaluate the performance of your suppliers and the products they supply, otherwise an unwise management can result in large monetary losses.

Tips for managing your suppliers

1..Classify your suppliers: Keeping track of suppliers is important, but organizing them into categories helps to see if there are any points that are intersecting and creating more problems than they solve. Some classifications that can help detect or anticipate these issues are: prices, response times, frequency of contact, reported incidents with services or raw materials, social responsibility, ecological impact, percentage of budget allocated, references, etc.

2. Constantly verify the performance of your suppliers: An important part of the evaluation of your suppliers is to constantly verify their performance, always keep an active record in which, as a classified log, you can verify aspects such as delays in delivery times, price variations, quality of service and follow-up, communication, etc. For example, if during the year you have a period of higher demand, you should be able to know if your supplier is able to supply the total of your needs or if it will be necessary to have a backup supplier (which is always recommended).

3. Record incidents: Suppliers are not exempt from making mistakes, so it is important to have a tool or a record of the incidents they present during their services and the way they respond to these. Managing this type of information helps to promote or change some practices internally or with other suppliers to maintain a response to problems that leaves the customer who suffers the incident as well as the organization that caused it happy and calm. In the event that a supplier does not comply with best practices or commits more errors than one considers acceptable compared to others, this information can help us determine if immediate corrective action is needed.

4. Select or change supplier: Based on your constant verification of your suppliers you can keep a clear and precise vision of the performance of each one of them, which will allow you to always know if you have found your main supplier or if it is time to look for a possible substitute. In either of the two situations mentioned above you can always go one step ahead looking for a backup option, but before doing so you must know the relevance of the function of a certain supplier within your organization, as well as the importance or criticality of keeping or changing that supplier.

In your search for a possible candidate you could always consider aspects to evaluate such as the trajectory of the possible supplier, look for references and even better if you look for references from industries or businesses in your same line of business that already work with the supplier you want. Also, knowing in general with whom the supplier has worked with can give you an idea of the quality of their products or services, as well as knowing the value proposition they would provide to your organization.

5. Keep your suppliers' contacts updated: As we mentioned, it is important to have a communication channel with suppliers not only to have the status of the orders or services that are required, but also to be informed of possible changes in their organization that may affect the tasks they perform. Having updated data on even the most sporadic supplier helps to expand the network of suppliers, to always have the latest information on the products they offer as well as the prices they bill us. Knowing these points is important to anticipate if it is necessary to change the quantity of products/services or even to change supplier in case this important factor in management is not being fulfilled.

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