Owning a commercial property requires you to work with outside vendors and suppliers. As a key part of your property’s success, vendors can make or break your business. In fact, the vendors you choose will often help a tenant decide whether or not they want to lease with you.
Therefore, it’s important to have a healthy and successful relationship with your vendors and suppliers. But how exactly do you do that? Here’s how.
Share Information and Priorities
The key to succeeding in vendor management is to share information and priorities with your vendors and suppliers. That does not mean that you throw open the accounting books and give them user IDs and passwords to your systems.
Appropriate vendor management practices provide only the necessary information at the right time to allow a vendor to serve your needs better. It may include limited forecast information, new product launches, changes in design and expansion or relocation changes.
Balance Commitment and Competition
One of the goals of vendor management is to gain the commitment of your vendors and suppliers to assist and support the operations of your business. On the other hand, the vendor is expecting a certain level of commitment from you. It does not mean that you should blindly accept the prices they provide. Always get competitive bids but keep in mind that vendor management is not just about negotiating the lowest price possible but rather constantly working with your vendors to come to agreements that will mutually benefit both companies.
Allow Key Vendors to Help You Strategize
If a vendor supplies a key part or service to your operation, invite that vendor to strategic meetings that involve the product they work with. Remember, you brought in the vendor or supplier because they could make the product or service better and/or cheaper than you could. They are the experts in that area, and you can tap into that expertise to gain a competitive edge.
Build Partnerships for the Long Term
Vendor management prioritizes long-term relationships over short-term gains and marginal cost savings. Constantly changing vendors or suppliers to save a penny here or there will cost more money in the long run and will impact quality – remember this.
Other benefits of a long-term relationship include trust, preferential treatment and access to insider or expert knowledge.
Seek to Understand Your Vendor’s Business Too
Remember, your vendor or supplier is in business to make money too. If you are constantly leaning on them to cut costs, quality will suffer, or they will go out of business. Part of vendor management is to contribute knowledge or resources that may help the vendor or supplier better serve you. Asking questions of your vendors will help you understand their side of the business and build a better relationship between the two of you.
Negotiate to a Win-Win Agreement
Good vendor management dictates that negotiations are completed in good faith. Look for negotiation points that can help both sides accomplish their goals. A strong-arm negotiation tactic will only work for so long before one party walks away from the deal.
Comer Together on Value
As we mentioned earlier, vendor management is more than getting the lowest price. Most often the lowest price also brings the lowest quality. Vendor management will focus quality for the money that is paid. In other words: value.
You should be willing to pay more to receive better quality. If the vendor or supplier is serious about the quality they deliver, they won’t have a problem specifying the quality details in the contract.
