5 Effective Ways to Maintain Good Supplier Relationships

|Updated on: August 23, 2021


Suppliers are essentially the starting point of the supply chain in any given industry, and thus have a huge impact on the subsequent business processes. Not only do they provide you with the goods and services required to run your business, but they also are important sources of information, advice and most importantly trade credit – something on which the typical small business thrives on.

Needless to say, supplier relationship management becomes critical for any small business. In the simplest of terms, it refers to interacting with and managing third-party vendors that provide goods, materials, and services to your business. It is a given, that as a business, you would like to work with suppliers which are reliable, quality-driven, cost efficient and easy to work with, so that your business can grow on scale. On the other hand, unreliable suppliers can create bottlenecks in your process and have a great negative impact on your consumers.

Of course, like most modern business practices, maintaining relationships with your suppliers have become more challenging than before. Thanks to the expansion of technology, the economy scaling up, and more recently GST dissolving state boundaries, a business now has multiple supplier choices at any given point in time. It is therefore tough to choose the supplier who is the best fit for your business, but it is not an impossible task.

In this article, we present to you 5 effective ways in which you can maintain good relationships with your suppliers and vendors.

Who are your Suppliers?

Before we move ahead, lets see who all play the role of suppliers for a typical small business:

  • Wholesalers & Distributors-Wholesalers purchase large quantities of goods in bulk and then resell them in lower quantities for a higher unit price. They generally offer the lowest prices because they are selling in large quantities and are usually reluctant to work with smaller orders.
  • Manufacturers & Vendors– These are suppliers who can handle the goods of several different companies. The prices might be higher than those of wholesalers, but they handle small orders from a wide range of manufacturers over a relatively short time period.
  • Importers– Importers largely behave like domestic wholesalers and sell foreign goods to businesses.

5 Effective Ways of Maintaining Good Supplier Relationships

Having long-lasting, trusted relationships with dedicated suppliers should be a primary goal of any small business that strives to succeed in the market. Let us now go through some effective tips for the same:

Communicate regularly

The most important thing which contributes towards maintaining a healthy relationship with your suppliers is to communicate with them regularly. Speaking to them only while making a purchase, will always put a limit to the understanding you share with them. Honest and open communication from both sides, will create transparency and prevent errors, such as incorrect inventory count or missing orders. When you require help the most, especially when you need to procure something on an emergency basis, it is this bonding which will make it easier for them to fulfil your requirements, with minimal delays.

Pay on time

Late payments, or non-payment almost always directly create a bad impression for you, which in turn will spread a bad word-of-mouth among other suppliers whom you deal with. If you don’t want to lose your valued suppliers, paying them on time is extremely important. Not only will this prove that you are a trusted customer, but it will also encourage them to deliver your goods in time as a matter of goodwill. If for any reason you cannot make the payment in time, then it is best to inform the supplier as soon as possible with the date by which they can expect the payment. Most of the times, they will understand the situation and work out a way with you to take things forward. In short, suppliers will always be ready to go the extra mile for you, if they see your punctuality with payments.

Provide adequate lead times

Always try to give your suppliers as much lead time – the time between you placing an order and receiving it - as possible. You may want the product as fast as possible, but you will also need to consider the fact that your order is one of many orders the supplier would have got from multiple businesses. Unless there is a good competitive reason not to, share with them an honest projection of your needs, and keep them informed about any significant changes in that estimation. Most importantly, while calculating your lead times, keep in mind the production methods and needs of your supplier as well. The occasional last-minute order is okay, but it is not correct to make it a habit, as ultimately this will make your suppliers unhappy and wary of working with you.

Be clear about returns

One of the crucial things needed to maintain a strong relationship with your vendors, is to ensure that they have a strong return policy, which is clear enough to avoid confusions and arguments at the time of returns. This will help you especially when products reach you in a damaged or defective state. In such a situation, you should notify your supplier right away, so that he can take corrective measures. It is important to handle any product returns with care and respect, and your vendor will be even more eager to issue replacements. Also, sometimes you may be left with unsold stock. Having a good rapport will ensure that your suppliers will be ready to take such stock back. Your inability to do so, will block your working capital, which will not be good for your business.

Create transparency via technology

Typically, small businesses communicate with each other on call or on email. Using a chain of emails to manage and coordinate with suppliers automatically creates confusions, which in turn, directly affects the relationship between you and your suppliers. Using a fully-automated procurement to pay system, which integrates all the information at one place, and can be consumed both by you as well as your supplier, is thus a huge advantage. Not only does this manage the process of procurement seamlessly, but also allows you to track the performance of your suppliers and vendors. Taking real-time actions based on the reports, will surely turn around your business, not to mention, increased understanding with your set of suppliers. In short, if there is one way to simplify supplier relationship management, technology is that way.


In conclusion, while all these steps will surely help you forge a long-lasting and mutually beneficial relationship with your suppliers, the overall sentiment should be appreciated and understood – of making your suppliers feel that they are part of your growth and success. Developing a personal connect with them, gifting them on special occasions, inviting them on special business events, keeping them informed about developments in your business, referring each other and helping each other grow the client base – all these also are crucial nuggets which take the relationship forward.

At the same time, evaluating the risks is also important. There may be times you may need to replace a supplier, simply because you have outgrown them, and they may not be able to help you scale. In such a case, you should not hesitate to explore alternate suppliers, and then re-apply these tips to create a beneficial relationship with them as well.

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