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Why contractors should partner with suppliersNovember 8th, 2021 by
The success of every contracting business revolves around the availability of customers, skills and materials. There are many ways to acquire loyal customers and workers. Some contractors engage in aggressive marketing campaigns and thorough talent searches to grow their clientele and workforce. But many forget to tend to the supply side of the business.
Some contractors don’t give much thought to their suppliers, often feeling like they can be replaceable. But there is more to suppliers than just getting materials delivered. Interruptions in the supply network can cause catastrophic project delays, cost overruns or quality assurance issues. The best way to maintain a steady supply chain in a construction or home services business is by forming strong connections with suppliers.
In this article, we’ll discuss why it’s important to form a solid contractor-supplier relationship and how you can get started.
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What is a contractor-supplier relationship?
A contractor-supplier relationship is based on mutual trust and understanding. It’s about engaging with suppliers as business partners rather than just vendors. But don’t get it wrong. A good supplier partnership does not necessarily mean business favors — slashed prices or anything like that. It’s more of finding a middle ground between the supplier’s interests and your business’s objectives.
For instance, as a business partner, the supplier should accommodate a flexible payment plan, depending on the business’s revenue streams. You could also agree on delivery schedules and product quality to maintain output consistency. A closely-knit supplier will also alert you to upcoming material shortages, regulation changes or price spikes that might affect your business. Such early warnings might buy you enough time to prepare your business and customers for major changes.
The pros and cons of supplier partnerships
Like any relationship, there are both advantages and challenges that come with it. Let’s take a more in-depth look at the pros and cons of cultivating a strong supplier relationship.
High level of trust
Trust is the foundation of any business partnership. With a high level of trust, you can be sure about the supplier’s commitment to meeting delivery deadlines and supplying quality materials. In return, the supplier trusts that you’ll pay as promised.
A good business partner will want what’s best for your business. A long-term relationship with a supplier can reveal useful insights into the material supply chain. For instance, the supplier may share valuable industrial secrets such as demand trends, letting you know the best time to buy or stockpile certain materials. A supplier’s guidance can help stabilize your business output and cut costs, pushing you ahead of competitors during difficult times.
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A contractor or home services business is not always predictable. At times, projects are few and far apart, and some clients may fail to pay on time. It’s important to have a supply partner that understands these challenges, especially when it comes to finances. Flexible pricing means that the supplier can customize cost-per-quantity, payment methods and scheduling on a per-project basis. So, you don’t have to worry about material costs while working on a tight budget.
Mutual trust and understanding with a supplier cut all the red tape in the supply line. This means the supplier won’t have to jump through hoops to prove material quality or authenticity. You also won’t need a ton of paperwork to show your capacity and willingness to pay for deliveries. Ditching the formalities saves a lot of time, money and effort for both parties.
It’s a long-term commitment
Forging a contractor-supplier relationship, however, is a long-term commitment. It takes time to build the kind of trust that binds business partnerships. Plus, with a deeply intertwined partner, switching to a new supplier can be difficult. But the point of fostering good relationships with suppliers is to preserve business commitments. So, as long a supplier meets your materials needs and helps the business grow, then the relationship is worthwhile.
How to establish a supplier partnership
A fruitful supplier relationship can make remodeling, building and home servicing so much easier. But you need the right partner to make it work. Here are a few pointers to developing a supplier partnership that benefits your business.
1. Define a strategic supplier partnership
Begin by defining what a strategic supply partner is to your business. What should you expect from the partnership—consistency, price flexibility, quality, customer service, etc.? A strategic supply partner delivers consistently to meet your customers’ expectations. Focus on stability, reliability and transparency rather than just supply costs when drawing up the ideal supplier. It’s more about keeping the business going at all times and less about getting materials at lower prices.
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2. Vet potential candidates
Pool similar suppliers and choose one that suits your business based on merit. You want a supplier that shares your values, vision and business strategy. The supplier must also be easily accessible, dependable and open to reasonable negotiations.
3. Local is always better
If possible, go for a locally based supplier or one that already serves your area. The close proximity will keep hauling costs down and make site visits easier.
4. Reach out
The supplier will treat you just like any other customer unless you propose a partnership deal. You can do this right away or after the supplier proves themselves with a few deliveries. Contact the supplier and arrange for a meeting to discuss the terms of a partnership.
5. Hold up your end
Every partnership works both ways. The supplier also expects you to commit to the partnership. So, ensure you hold up your end of the bargain. In most cases, this means paying on time, observing return policies and checking your expectations.
A big part of business success depends on the quality of internal and external relationships. While working on building customer relationships and a happy HR community, don’t forget about your suppliers. Secure your business with dependable supply lines by partnering with suppliers who put your interests first.