Good supplier relationships are vital in construction. By managing suppliers, understanding how they work and measuring supplier performance, you can be much more confident that your supply base can deliver when you need.
Rather than reactively reaching out to market whenever you need to find a supplier, supplier relationship management (SRM) is about proactively fostering relationships with your supply chain.
Whether you are just at the beginning of implementing supplier relationship management, or your company has been building these beneficial relationships for years, there is always room for improvement.
Why improve supply chain management?
There are countless reasons to improve your SRM process. Some of the most significant benefits include:
- More consistent growth: Numerous studies have shown companies that collaborate with suppliers are more profitable and grow faster.
- Lower risk of supply chain problems: Construction companies understand their partners and find out about shortages in the supply chain – better preparing them for risks.
- Less chance of disputes: when you manage suppliers effectively, you are less likely to encounter the kinds of problems that lead to litigation.
- Happy suppliers: The buyer-supplier relationship is a two-way street. If your suppliers feel valued, treated fairly and respected, they will be keen to keep working with you.
- Improved planning: If a firm has a trusted relationship with its suppliers, it can bring them in on strategic plans. That helps both parties to prepare better for upcoming work.
These are just some of the many advantages of working on supplier relationships. So how can you go about achieving them?
5 ways to improve supplier relationships
Your company may have already segmented your supply base, have governance plans in place and collaborate well with suppliers. Or you may just be beginning to implement an SRM process.
Wherever you are on the journey to building your procurement and supply relationships, the following tips can help you improve further:
Trust is undoubtedly the most significant facilitator in improving supplier relationships. So how do you go about actually building trust? It can vary depending on how long you’ve had a relationship with each supplier, but it can include things like:
- Starting with small projects to get the ball rolling and understand each other’s needs and processes.
- Meeting regularly with suppliers either face to face or over video calls.
- Actively doing things to benefit your suppliers (such as passing on business or contacts that might be useful to them).
- Use efficient systems for paying suppliers.
Example: Once a month, your company’s supply managers schedule a call with strategic suppliers to give them a quick update on what your business is doing and what the pipeline looks like.
Clear, transparent and consistent communication is vital in working with your suppliers. This helps suppliers understand your company’s strategic plans and grasp precisely what you expect from them.
- Good communication includes things like:
- Consistently using the same channel to communicate and send information.
- Sending clear feedback on supplier performance.
- Listening to the supplier about their ambitions, goals and current capacity.
Example: Your company can use an online portal to handle all proposal requests and communications with suppliers – so everything is on the same system.
3. Set clear expectations
Setting expectations means your suppliers will know what your business needs, what kinds of timeframes are involved, plus any standards they must meet. They will know where they stand with you, which reduces the risk of mistakes or failures.
Setting expectations involves things like:
- Using purchase orders that identify the materials you need, quantities required, due dates and so on
- Informing your suppliers about which documentation you need from them - including any health and safety certificates.
- Ask new suppliers to complete a pre-qualification questionnaire.
Example: Your company has just updated its modern slavery statement. You want to ensure all businesses in your supply base (both in the UK and abroad) conform to the law and send out a survey to gather information about their policies.
Related article: See how one firm verifies health and safety across the supply chain
4. Understand one another
A vital job for supply managers is to really understand partners in the supply chain – and make sure they understand you too.
Understanding one another can take very different forms, but involves things like:
- Requesting a supplier’s data on things like business structure, financials, vision, etc.
- Sharing strategic plans and innovating with your supply base to win more work.
- Sending out surveys or newsletters with updates.
- Inviting strategic suppliers to your business’s annual conference to understand your goals and purpose.
Example: When you have a new supplier to onboard, ask them to fill in a survey to provide critical information about their company.
5. Use the right technology
Supplier relationship management technology facilitates many aspects of good supplier management. This kind of software allows buyers to:
- Collect their supplier’s data in a consistent format.
- Communicate with them easily.
- Provide feedback on supplier performance.
Example: By using a supplier relationship management tool, your company automatically collects a new supplier’s payment information and sends this through to your finance department. That means suppliers always get paid on time.
Improve supplier relationships with Causeway
Causeway Supplier Management is an industry-leading platform where procurement teams can collect all the information they need on their supply chains, communicate with partners and build trusted relationships. Designed specifically for the construction sector, it is used by major contractors across the UK to improve supplier relationships.