Strong supplier relationships matter, especially in South Africa’s unpredictable business environment. For many businesses, they are key to long-term success and growth.
Follow these three simple steps for building stronger supply partnerships in South Africa.
1. Build for the long term, not just the next order
A resilient and dependable supply chain is critical to business success. It involves identifying suppliers with a history of delivering quality products on time, and forging strong and enduring relationships based on mutual trust and engagement.
A long-term approach means planning for the worst-case scenario. That’s why it’s critical to create a database of alternative suppliers that can easily be onboarded, if and when required.
Choosing the right suppliers based on financial stability and supply capabilities, and regularly updating a list of alternative suppliers, results in fewer disruptions. This is crucial to completing projects and fulfilling orders on time.
Active collaboration beyond negotiating price and payment terms is as important. Involving suppliers in the project planning process, or new product development initiatives, can drive innovation, improve efficiencies, and help identify and resolve potential challenges.
2. Communicate often and openly
Good communication is the foundation of a strong client-supplier relationship. When information is shared regularly, clearly and concisely, there’s less chance of disputes, delays or misunderstandings.
Setting up feedback loops, and conducting frequent open discussions, is crucial to building enduring supply partnerships. Issues can be dealt with proactively, quality and consistency properly maintained, and supplier queries responded to quickly and clearly.
Sharing accurate order forecasts, quality and lead-time expectations, and payment terms demonstrates trust and transparency. It allows suppliers to plan production, and procure and allocate raw materials and resources accordingly.
With constant engagement, your business can become the suppliers “customer of choice”. That can mean preferential treatment, more favourable payment terms and a competitive edge.
3. Pay on time
Late payments can have negative consequences for your business. They can strain supplier relationships, lead to stricter payment terms, and even ruin your business’s reputation.
The opposite is true when payments are made according to the agreed schedule. Suppliers tend to prioritise buyers who pay reliably, even over those who place larger orders. Timely payments ensure the suppliers’ financial stability and dependability – and that’s a win-win for all concerned.
It may be tempting to delay a payment, especially an upfront payment, to preserve business cash flow, but that is not the way to sustain supply relationships. There are other ways of raising the funds required to pay suppliers on time.
How purchase order funding can help
Purchase order funding is flexible business finance secured against an existing purchase order. It allows companies to pay suppliers upfront and fulfil orders without impacting business cash flow.
Having the ability to pay suppliers reliably and upfront makes your business much more attractive in terms of future orders. It is likely suppliers will “go the extra mile” to help your venture succeed, along with their own.
Accessing capital for timeous and dependable payments has a ripple effect for small to mid-sized businesses. It helps your suppliers survive and grow, and increases the value of client-supplier relationships.
To learn more about how purchase order financing can help build stronger supply relationships, call BizFunding on 010 157 2499 or apply online today.
