Many businesses have talked about the importance of having a solid buyer-supplier relationship. While buyers are at the advantage of availing of benefits, we need to look at the supplier’s side as well. Any business enterprise needs resources to build the end product, and suppliers either provide those resources or supply them from various sources. Either way, it’s wise to understand the significance of a buyer-supplier relationship and how it benefits the business.
Not only do you get better business value, but you’re also likely to be offered special prices and terms: to say the least. Therefore, we need to look at the aspects that make the supply chain cost-effective and efficient. It does help in business credit management when you’ve got a transparent supply chain process: you can maintain a decent cash flow cycle.
In this blog, we’ll discuss the benefits of having a solid base that comes with maintaining a healthy buyer-supplier relationship.
Improved efficiency
When you’ve got an established rapport with your supplier, you can communicate clearly and bring an element of transparency to the process. On the other hand, your supplier puts effort into understanding your business better. It all leads to improved or increased efficiency in the supply chain process. There are no more delays or availability issues. There are fewer conflicts, and the flow of operations improves. You both make it happen through mutual understanding.
Cost reduction
As a buyer, if you’ve got a great relationship with your supplier, you can eliminate the set-up cost, especially in the case of a new supplier. It can work in the long run when there is heavy material purchasing or complex financial transactions involved. You can maintain a running supply chain as there’re fewer goods availability issues and you can count on the quality of the material procured.
When you seal the deal with a new supplier, they offer lower prices to bait a higher volume of goods as they seem to profit the supplier. It may take time to surge but what’s good is that you can have a steady cash flow cycle. When you keep buying from the same supplier over time, you can count on the material quality and increase the volume. Here, the point to note is that you also need to make efforts. Initially, it’s a one-sided relationship. But your relationship becomes two-sided through mutual respect and cooperation.
Reduced price fluctuations
As an MSME, fluctuations in the market prices will catch you off guard. An increase in commodity prices may result in such fluctuations. In case you’re unable to conclude, a solid buyer-supplier relationship can save the day. You can enjoy fixed pricing, minimum order value, or longer contract terms. It’s a win-win situation for both parties. If you’re the buyer here, you can think on the lines of B2B credit management. If your business with a particular supplier runs on credit, it’s essential to know smart credit management tactics.
Improved operations
Client reviews and customer feedbacks are crucial for any business that aim at scaling heights. When there is an element of trust in a buyer-supplier relationship, there’s a free flow of ideas. Neither of the party is reluctant to share suggestions and areas of improvement. It results in a streamlined supply chain process that can help you reduce cost and improve productivity. The feedback could be related to inventory control, order processing, or material and payment acknowledgment.
It’s relevant to understand the role of credit information bureaus when starting a buyer-supplier relationship. You can check your vendor’s business credit report provided by any leading credit information company before joining hands with them. You can get a fair idea about the business and if your business relationship will turn fruitful in the future.