Anne Timpany, Director at On Tap Plumbers, outlines how building relationships with your supply chain can help ensure your business reaps the benefits.
One way or another, whether as a sole trader or a bigger plumbing firm, we are all relying on a good supply chain to provide us with the materials we need to run a successful business.
Of course, some materials can be bought directly from a supplier and put straight into your van, but where you need to order them and get deliveries, we probably need a new approach.
How much do you value your supply chain? Carillion, the company which recently went bust while owing approximately £6.9 billion, clearly didn’t value anyone. As a (formerly) massive company, it had a lot of power and was able to lever an astonishing 120 day payment for invoices. However, unfortunately Carillion isn’t the only large corporation that doesn’t respect the small suppliers whose cash flows can be seriously hit when their invoices aren’t paid in a reasonable amount of time.
You can negotiate much better terms and discounts if you can adopt a fruitful relationship with the firms which supply you with what you need. Of course, you don’t want to run the risk of your own cash flow being seriously depleted, but paying on time makes you a valued customer and will reap benefits over time.
You can evaluate your suppliers on their products and what they offer as a service. Give them advance notice of your product needs and delivery requirements, but if you have an emergency need and they go the extra mile to service your requirements, express your appreciation. It’s also helpful to both parties if you tell them what you expect from them in terms of their service.
The lifetime value of a customer is at the heart of any product supply chain and there are excellent opportunities to develop mutually beneficial long-term agreements. Forward thinking companies understand the competitive advantage of viewing your supply chain not as just a necessary cost of providing a product or service, but as a source of extra value and profit.
Businesses which focus less on cost reduction in the supply chain and instead seek ways to leverage value-adding opportunities will probably find that their productivity improves and their profits subsequently increase. A supplier whose service and products you can trust who also values you as a customer can be a very valuable asset for your business.
In light of the ongoing coronavirus crisis, some of you may not be able to receive your copy of HVP magazine. If you’d like to change your delivery address, please contact our subscriptions department at email@example.com
Read a digital edition