Suppliers; what to consider when managing them
(the below blog was written for the Fashion Platform "Fashion Bloc")
In the fashion industry, you are reliant on suppliers for a number of services and goods, including:
- raw materials
At a minimum, the effects of delayed deliveries, poor quality or missing materials serves to make your life harder, and your processes slower. At the more severe end, problems with suppliers can have significant implications on cashflow and business growth.
Here are three strategies to manage your suppliers:
Set Written Goals:
- Be clear on what the goals of working together are; write them down and agree them with your supplier. This provides clarity, and should anything go wrong, an audit trail of evidence on what was agreed.
- Establish a contract with your suppliers. This is a legally binding agreement that determines:
- the specific scope of work
- when the work will be performed (when will goods be delivered or services be provided)
- the terms of payment (how much will be paid and when will the money be paid)
- Build in buffer to your goals; optimising your supply chain is fundamental. Plan for small glitches; sometimes issues are outside of your suppliers hands (weather conditions preventing delivery etc), and sometimes your suppliers are reliant on their suppliers.
Know Your Market:
- The world of fashion moves quickly; suppliers go in and out of business. Know what your back up options are.
- Understand the cost of your products; this effects your margins, and your working capital. Do you need to build in exchange rate fluctuations will suppliers being paid in local currency?
- Audit your suppliers:
- which competitors do they work for? Do you want to work with a supplier close to your competitors.
- does your supplier have enough money? Check Companies House to obtain financial information on your supplier (if registered in the UK). If they don't have enough money, they may not meet your delivery requirements.
- do they have an ethical footprint? Are you concerned how they treat their staff or the environment.
Build great relationships:
- Pay your invoices on time; don't upset and put cashflow strain on your suppliers.
- Plan appropriately; try not to leave suppliers in the lurch or ask demanding last minute requests.
- Meet your suppliers: in the event of something going wrong in the supply chain, your supplier is likely to try going above and beyond if a relationship has been built between yourselves.
- in a digital world it's so easy to hide behind emails. Taking time out of your busy schedule and meeting face to face adds the personal and human touch.
- christmas gifts; small but bespoke gifts again adds the "I care factor"
- try to add agenda's to meetings, particularly formal ones. It shows professionalism, which most likely enhances your suppliers want to come back to you for work.
Managing your supply chains and your suppliers is critical to an optimal and cashflow efficient business. Those tips should provide a steer on managing suppliers.
Photo from the beautiful unsplash.com