What are Supplier Relations?

Mary McMahon

Supplier relations is an area of a business' activities focused on cultivating positive and beneficial relationships with vendors who provide supplies. This includes suppliers of raw materials, manufacturers, and other types of supply partners. Big companies may have a supplier relations department that oversees interactions with suppliers large and small. Building and maintaining strong supplier partnerships benefits both the business and the supplier.

A confidentiality agreement is sometimes signed.
A confidentiality agreement is sometimes signed.

One aspect of supplier relations involves spelling out expectations. Companies may expect their suppliers to sign confidentiality agreements, for example, or to follow certain legal and ethical standards. These can include everything from mandating that suppliers not use child labor to expecting suppliers to comply with environmental laws. In return, the company agrees to meet supplier expectations as well, such as paying suppliers in a timely fashion, providing enough advance notice for orders, and working together with suppliers to resolve issues.

Businesses often focus on cultivating positive relationships with their suppliers.
Businesses often focus on cultivating positive relationships with their suppliers.

Companies need strong relationships with their suppliers for a wide variety of reasons. Good relationships ensure that supplies will be available when they are needed, that the perception of the company among suppliers will remain positive, and that the company will have lasting relationships with vendors it likes. Long term relationships can provide companies with access to personalized service including assistance with product development, special deals on supplies, and other services that benefit the company.

Suppliers communicate with each other as well as with their customers. A company that is known for having poor supplier relations may have difficulty getting favorable terms for deals and can find that it has difficulty locating suppliers to work with. Especially angry suppliers may even go public, giving a company a bad image. Just as companies work to keep their customers happy, they must also work with their vendors to create a strong working relationship.

Suppliers and businesses may even work together on promotional campaigns and other business activities. Part of supplier relations can include finding areas for potential collaboration that will be mutually beneficial for all parties.

For suppliers, being aware of company expectations from the start allows for better service. The supplier can meet the needs of the company as precisely as possible when it knows about the company's needs and concerns. In a long term relationship, this can include predicting needs, providing suggestions, and working with company representatives to resolve supply line issues and other matters. Suppliers like to build long term relationships because they are a steady and reliable source of income. Having to constantly seek out new customers can present significant barriers to business success.

Suppliers provide goods to vendors in return for agreed upon compensation.
Suppliers provide goods to vendors in return for agreed upon compensation.

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