How to spot supplier risk in communication

BenGoldwasser_100.jpgCommunication is a critical component of any business and is no less crucial in supplier relationships. When your company has great communication with its suppliers, it can be like adding another department to your organisation.

There are a large number of suppliers who do an excellent job communicating with their customers. You probably have several suppliers that you can think of right now that practice excellent communication. But what is it that sets these suppliers apart? Ben Goldwasser, Business Development Professional, Spendrix, investigates.

Better communication undoubtedly leads to more efficient business practices. This can be seen in being able to respond to customers quickly and with thorough information. Also, suppliers that communicate well understand your company’s objectives as well as how their business fits into these objectives. When a supplier exhibits these traits, errors related to communication issues are much less common.

Unfortunately, there are a number of suppliers that are not as transparent with their customers as they ought to be. This breakdown in supplier communication can introduce various risk factors into your supply chain. The question thus becomes: how can you spot risk in supplier communication?

The details simply don’t align
You may have a contact that you normally deal with when working with a supplier. This is the person you go to with new jobs or when you have any questions to clear up. However, what happens when your contact provides you with inaccurate information? For example, your contact may have quoted a new job at a certain rate, but the official documentation states otherwise. Another example may be stating that a truck is in transit when the GPS tracking shows that the truck is stationary at a truck stop.

Accidental or not, these mistakes slow down your business, cost you money and damage that supplier’s relationship with your company. If misaligned details become a recurring problem, it is probably time to find a new supplier.

Non-responsive to outreach
When you cannot reach your supplier, or attempt reaching them multiple times without any follow-up on their part, you should start to be wary. Does the supplier not value your business? Do they lack the manpower or technology to field incoming communications and respond accurately and promptly? More importantly, how will their delayed response affect your company if something goes wrong during a job or if you need a piece of vital information to relay back to your customer?

A delayed response could have devastating costs in situations like these. Overall, it is hard to put a lot of trust in non-responsive suppliers, as you never know when you will hear from them next.

Won’t answer direct questions
Suppliers with great communication can be relied upon time and time again as valuable components of your company. Generally, you have detailed knowledge of these suppliers and trust the information that they provide. However, the same cannot be said for suppliers who routinely dodge difficult questions or provide you with answers that do not get to the core of what you are asking immediately.

Whether they aren’t actively listening during your conversations or simply don’t have the adequate industry knowledge to appropriately answer, these are major causes for concern.

Effective communication is a cornerstone of strong relationships between your company and suppliers. Such relationships, especially with strategic suppliers, are often collaborative, and both your business and your supplier’s business will grow together. Conversely, poor supplier relationships present a threat to your business, however, it is possible to hedge against supplier risk. By identifying supplier risk via communication practices, you can work to eliminate suppliers from your business or to reduce their role in your supply chain.

Supply Chain Minded

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