Supply chain 6 December 2017

Five tips for strengthening supplier relationships after Brexit

Brexit
Brexit will throw up a few problems in international supply chains

Here, director at the Chartered Institute of Procurement and Supply (CIPS), Duncan Brock, shares his tips for strengthening supplier relationships.

Brexit will be a significant turning point for UK businesses, given that the EU is the UK’s largest trading partner. Some 43 per cent of all UK exports go to the EU, whilst 54 per cent of all imports come from the EU.

Preparing for Brexit is one of the biggest challenges facing businesses today, particularly due to the level of uncertainty around what it will mean for them and the future of their trading.

A number problems are created for international supply chains, pushing up costs and probably causing delays.

As a result, it’s no surprise that nearly two-thirds (63 per cent) of EU businesses who work with UK suppliers expect to move their supply chain out of the UK, according to a survey amongst the procurement and supply community this year.

Similarly, two fifths (63 per cent) of UK businesses with EU suppliers have begun the search for domestic suppliers to replace their EU partners.

Switching suppliers is often a lengthy and costly process, and many of those looking to switch suppliers may struggle to find suitable alternatives, particularly within the limited amount of time they have left before the UK leaves the EU.

Having recently given evidence to a government committee for exiting the EU, it became clear to me that although Brexit means it will become more difficult to trade with EU countries post-Brexit, those that have good supplier relationships with their EU partners are more likely to be able to work through any speedbumps.

Getting to know your suppliers can bring significant benefits. They are more likely to offer better prices, invest in their business to meet your future needs and generally provide support beyond contractual terms.

If you treat them well, they may help to come up with innovative new ideas. Foreign suppliers may even agree to build manufacturing capabilities in the UK if businesses provide them with certainty, which would be a significant help in navigating Brexit.

Equally, from a supplier’s perspective, having a good relationship with your customers, whilst also showing that you have a good understanding of their business and are willing to support them, could mean they do more business with you and are less likely to consider switching.

You could think about setting some shared objectives, so both parties feel like they’re truly working together. Here are some tips on how you can strengthen some of those supplier relationships.

Five tips for strengthening supplier relationships

(1) Don’t miss deadlines

Your customers rely on you delivering on your promises, and failing to do so can damage the supplier-customer relationship.

Equally, suppliers are likely to get frustrated if they aren’t paid on time because it can put strain on their cashflow. If you expect you might miss a deadline or can’t pay on time, let them know before the deadline, ideally with as much notice as possible.

You may have to review payment terms so as not to put too much stress on either buying or selling organisation.

(2) Consider reducing your payment terms

Extended payment terms are a longstanding frustration for suppliers. Although they mean that you have more cash available, they damage your relationship with suppliers.

Reducing your payment terms can set yourself apart from the other businesses they work with, making them more likely to go the extra mile for their customer of choice.

(3) Talk to them regularly

Communication is key to a healthy relationship. It can also pay off by giving you extra information on the supplier you may not otherwise have known about. Equally, suppliers should actively engage more with their customers too so that they can develop a better understanding of their business.

(4) Be honest

Earn your customers’ trust by being honest with them, listening to any concerns they may have and involving them in your processes and creating a culture of sharing news good and bad.

(5) Remember you aren’t their only client

You know what it’s like to deal with several customers and suppliers at the same time, so just remember that they are doing the same.

Giving them some leeway when they’re in need will help to motivate them, and might make them more likely to spend extra time working with your company.

Although Brexit is causing significant disruption in supply chains, building good supplier-customer relationships is still crucial, and can smooth the road ahead.

Without their suppliers, businesses would not be able to provide their customers with the same level of service they do now.

Equally, suppliers will lose revenue if their customers choose to look for an alternative company to buy from. By building strong relationships, businesses can work and navigate the Brexit process, so everyone wins.

Duncan Brock is group director at the Chartered Institute of Procurement & Supply (CIPS)

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