How to Manage the Performance of Your Suppliers

By July 12, 2017Leadership

I guess it’s happened to all of us at one time or another. A supplier or subcontractor has let you down and failed to deliver on time. This means that you have to go to your customer and apologise for someone else’s failure.

Situations like this can have a serious negative effect on your business.  Firstly, it weakens your relationship with your customer.  Secondly, it makes you feel that you cannot trust your supplier and your relationship with their business is less strong.  Thirdly, an event like this can affect productivity, lower morale, disrupt planning and create a huge amount of stress for all concerned.

There are several ways of minimising these disastrous incidents.  Bearing in mind that Murphy’s Law is alive and well.  This means that you can never, ever be absolutely sure that everything will follow the plan.  However, there is one strategy that works extremely well and has a relatively low cost.  When you think about your suppliers, consider how much better your business would operate if all your suppliers gave you what you wanted when you wanted it.

The first stage of implementing this strategy is to ask your team for a list of criteria that would make up the perfect supplier.  After a little bit of thought they may come up with a list that looks something like this:

  • Reliability.
  • Consistent quality.
  • Consistent pricing.
  • On time delivery.
  • Flexible.
  • Keeps in touch.
  • Pleasant to deal with.
  • Excellent customer service.
  • Goes the extra mile.
  • Good listener.

The next stage is to expand the criteria so that you can write a paragraph on how it can be translated into recognisable behaviour.  An example could be Keeps In Touch.  Whenever there is a hold-up in the delivery then the supplier is immediately on the phone advising that there may be a delay.  When the product has been completed and been dispatched, the supplier will telephone to advise the estimated time of arrival.  If there are quality issues, the supplier will discuss them as soon as possible.

Once all the criteria has been written up in this fashion, arrange a meeting of your suppliers.  Explain that there is going to be a competition among suppliers to see who comes closest to meeting all the criteria.  Pass the criteria are around and answer any questions that may be generated.  Invest in a trophy that can be engraved and show it to your suppliers.  The trophy should be impressive enough to display on their boardroom table or in their reception.

Let your suppliers know that there will be monthly feedback on their performance culminating in a dinner or a barbecue when the trophy will be presented.  This trophy can be awarded on an annual basis complete with a framed certificate and, if possible, a photograph of the award ceremony in the local paper and the company magazine.

The publicity is free, the cost of the whole exercise is normally much less than the losses that are incurred through a poorly performing supplier.  When you do this, you will find that the performance of all your suppliers improves considerably.  This means that you have raised the suppliers’ performance bar.  If you start working with a new supplier they have to be clear on your expectations of their performance.

Peter Mitchell
Workplace behavioural change specialists
Evidence Based Training Ltd


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Peter Mitchell

About Peter Mitchell

Peter L Mitchell is an international specialist in workplace behavioural change, trainer, writer and speaker. During the last 40 years he has started several successful businesses and also mentors small businesses to be more profitable.