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Procurement

Forging Better Supplier Relationships

Of the many documented benefits of Contract Lifecycle Management (CLM), there is one that is spoken of little; that is the advantage of building better relationships with your suppliers.

While most business cases tend to focus on the measurable and hard dollar benefits that good CLM brings, and it does, we forget that there are downstream financial benefits to forging good working relationships with suppliers.

Implementing good CLM including modules that allow deeper engagement and common and consistent communication standards are well appreciated by suppliers and make working with your organization easier.

Here’s three ways that making suppliers lives easier through CLM provides benefit to you.

  1. Communication is king. It has always been this way. And with modern technology, there is no excuse for not being able to communicate frequently and efficiently with suppliers. You communicate with your customers, don’t you? Why should suppliers be any different? You have entered into an agreement with a supplier to achieve a mutually beneficial outcome, so keep talking and work together. Anything you can do to make the relationship work better will help you achieve that benefit. Good contract management tools allow buyers to manage communication with suppliers in-system, and provide an audit trail that can be used as a chronology of events should it be required. Both you and your supplier can always come back to the system to look up earlier emails, and check what was said. Keep site instructions, letters, and day-to-day notes and meetings, all in a central repository, and everything will be at your fingertips should you need it. So using your CLM system to communicate with your suppliers keeps them informed, and helps you down the track.

  2. Providing documentation on corporately standard and consistent templates shows suppliers that they are dealing with a professional and competent organization that is worthy of doing business with them. Many buyers use different formats and follow different processes to get things done (or no process at all), depending on which staff member handles an enquiry. A ‘systems approach’ using CLM allows staff to follow workflow steps when performing tasks, and everybody does things exactly the same way. This leaves suppliers feeling comfortable that queries will be handled consistently and efficiently, and no matter whom they speak to, they get the same answer. If you make your suppliers feel safe and secure, they will be far more likely to look after you come negotiation time.

  3. Pay them on time! There is nothing that keeps suppliers happier than paying them within the contracted payment terms. It’s not that hard. Time and time again suppliers are forced to accept late payment from large corporations, afraid to say anything because of the fear that their business could be taken away. With a CLM system in place to handle central contractor payment certification you can process claims quickly, and issue payment certificates and RCTIs within the correct timeframes, avoiding litigation and keeping your suppliers and contractors happy.

There is no debate that good relationships with suppliers lead to better prices and better terms. Gone are the days (I hope) of bullying prices down. Better relationships and prices can be achieved by implementing systems that provide corporately standard processes across your business, and help your suppliers do business with you.