Stronger Supplier Relationships

October 17, 2012
Written by Brian Minter
Our businesses are built on relationships – relationships with our customers, our staff, our bankers and our suppliers. We spend a great deal of time and energy learning how to improve the changing relationships with our customers and the folks with whom we work, as well as with our money lenders, but we put very little time into the rapport we have with our suppliers.

We tend to look at supplier relationships as ones of negotiation for products. We also perceive them as being there to serve us and to have most items available anytime we need them. As a client of theirs, we have the expectation of being treated exceptionally well even though we don’t always act as agreeably as we would expect of our good customers. Relationships are built on good faith and ethical ways of doing business. It’s a two-way street.

I always chuckle when I remember that a few years ago, one of North America’s most innovative mail order plant suppliers, Plant Delight, included what is expected from a good customer in its catalogue. Some of the reactions they garnered were truly outlandish. Many customers thought it was outrageous that any business would dare to tell a customer how to act. There seems to be an entitlement attitude in being a customer – an entitlement we need to get over when dealing with our suppliers. Our suppliers are critical to our success and we need to treat them as important, trusted partners in our business journeys.

There are three key issues in dealing with our major suppliers that need to be paramount in any relationship. The first is compatibility. Is there a match in culture and values? Consumer satisfaction should be the shared ultimate goal. Having a reputation for quality and consumer success is absolutely critical for a long term relationship with our customers. That means exceeding expectations in product quality, warranty policies and consumer information. These shared values are also very important in dealing with everyday issues that arise on a regular basis with suppliers.

Honesty and integrity play a huge role when it comes to shipping shortages, damaged goods and product performance and quality. Also, going above and beyond in busy, challenging times is a huge relationship issue, whether it’s sourcing difficult-to-find products, after-hour deliveries or resupplying urgently needed products.

Loyalty is the other side of this coin, especially when suppliers provide exceptional service. Purchasing the same products from a competitor for a few dollars less is, quite frankly, a deal breaker in terms of strong relationships. Again, it’s shared values that build trust and help both the customer and the supplier grow.

The second most important issue is dealing with change management. What happened three years ago or last month may not be relevant tomorrow. Changing lifestyles, shifting demographics and emerging new economic realities often trigger fast-paced changes, creating new trends and opportunities. Supplier relationships also need to be based on the changing relevancies of products. If certain pest control products are being legislated out of existence, do you have a supplier who anticipates these changes and has effective organic alternatives? If ceramics are out, are resin options readily available? When large shade and big flowering trees fall out of favour, do you have an innovative grower with patio trees on the horizon? It’s important to choose suppliers who are on top of trends, innovative in their approach and have credible alternatives in the supply chain. As their customer you too need to match that innovation and be willing to try new products and support new trends. In a strong relationship, you need to share that risk, even to a smaller degree. No one always gets it right, but partnerships where both parties are forward looking, take calculated risks and innovate will always come up winners.

There is no question that volume purchasing and simplicity of shipping is the best way to negotiate price. Being a member of a buying group is the most practical way to facilitate these types of transactions. Some groups work with major suppliers who have efficient warehousing and distribution systems to make sure it’s easier for smaller retailers to receive better pricing. Suppliers generally take lower margins in these types of transactions where there is no stocking, little risk and payment is secured. Many wholesalers will also carry a little extra stock to help out resupplying faster-turning products. This is a win/win situation for everyone. Preplanning and advanced bookings are crucial.

Growers and suppliers (nursery, greenhouse and perennial) have challenges with many independent garden retailers. With so many new plants being introduced each year, it’s very difficult to know what to grow and how many of each. Strong brands such as Proven Winners, Ball Ornamentals and Wave petunias, demand attention and bench space, but how much is the right amount for each category? Weather also plays a huge role in retail sell through. I believe as independents we need to build far stronger relationships and communication channels with our growers to ensure we have the right products when we need them, and so growers can better deal with weather issues and turn crops as they need to. Everyone works on a thin edge today and improved working relationships will help immensely, especially on variety, numbers and price points.

One of the most critical issues for supplier relationships is payment for products. Cash flow in seasonal garden stores can be challenging, especially in bad weather years. Suppliers generally offer terms for seasonal payments when their clients have cash flow to pay bills. Part of this understanding comes from clients booking orders early to price and set up in stores to be ready for the season. When payment terms are due, they must be paid to keep the relationship working.

As retailers, it’s up to us to connect with our suppliers to create better relationships that work to improve the supply and flow of products that keep us both successful. There are always going to be challenges along the way, but having good partnerships, built on integrity and honesty, will always win over isolation.

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