How to Deal with Suppliers as a Business Owner 

For business owners, success often depends on skillfully aligning a series of crucial pieces in a puzzle. Supply chains form a vital component of that intricate puzzle. Strong relationships with suppliers are essential for a successful business. They help to ensure a consistent and reliable source of goods and services. This article will explain best practices for business owners surrounding choosing and working with suppliers, including the importance of using supplier contracts.

1. Selecting the Right Supplier

First of all, ensure that you work only with reputable suppliers who meet your business’s needs and provide only quality goods and services. To find the right supplier, you should identify your business’s requirements, including:

• product specifications;
• quantities; 
• quality standards; and
• delivery schedules. 

Then, begin identifying potential suppliers through various channels. You can find suppliers through online searches, industry directories, trade shows, and the recommendations of other businesses. When you have found a likely candidate, assess their experience and reputation within your industry. A supplier with relevant expertise is in a better position to understand your business’s needs. 

At this stage, feel free to ask questions. Establish a good understanding of them. For example, ask them about their ability to handle disruptions and request samples of their products. 

2. Communication is Key 

Good communication is crucial to fostering a productive relationship with your supplier. This involves:

• voicing your business’s priorities; 
• keeping detailed records; and 
• ensuring open communication channels. 

Furthermore, face-to-face meetings, at least at the start of your relationship, can help suppliers understand your business and tailor their services to meet its specific needs.

Both parties to the relationship need to be good communicators. Many supplier-customer disputes come down to poor communication. Explain your business’s schedules, specifications, and quality standards. When suppliers understand your business’s needs and priorities, they are more likely to meet deadlines and deliver quality products. Throughout your search, remember that the lowest price may not be the best deal for your business. 

3. Supplier Contracts

Through your business experience, you may have noticed the damaging impacts of slow and ineffective supply chains. Supply issues can lead to reputational damage and loss of income. Delays can have a damaging effect on the overall health of your business. 

Supplier agreements can alleviate and avoid issues with supply. Supplier agreements are contracts shared between companies and their suppliers. Within these contracts, you establish the responsibilities of both the supplier and the business. As a supplier contract is legally binding, a breach of its terms can result in legal consequences. For example, if the supplier delivers goods or services late, you can seek legal remedies. 

Clear and well-drafted supplier contracts ensure that all parties understand their obligations and responsibilities, leaving little room for confusion. When writing a supplier contract, include the following:

• the specific of the goods or services you require; 
• the date the supplier must deliver the goods or services by; 
• the consequences of a breach of the supplier agreement; and
• how your business or the supplier can terminate the contract. 

A lawyer can help you write this contract or review existing drafts. If you receive a contract from a supplier, you should check it carefully, including terms, warranties, and penalties for non-compliance. Consider seeking professional advice about these, too. 

4. Be a Good Customer 

To maintain good supplier relationships, be a good customer. Pay invoices on time, be honest, and perhaps consider using more services of existing suppliers for more dedicated attention. Loyalty is often crucial to a successful long-term relationship. A strong and loyal supplier network can help to mitigate supply chain risks. When businesses have multiple trusted suppliers, they are better prepared to address disruptions and unforeseen challenges. 

Key Takeaways

Your relationships with suppliers form an integral part of the health of your business. Issues with the supply of goods or services can affect your business’s reputation and income. Therefore, it is important to only work with suppliers that can meet your business’s needs. Throughout your working relationship, you should maintain honest, clear, and open channels of communication with your suppliers. Be clear with them about aspects such as deadlines and quality standards. 

Consider using a supplier agreement. Within it, establish clear expectations, set deadlines, and outline the consequences of non-compliance. Remember to be a good customer and aim for a relationship that is sustainable in the long term. However, be firm with suppliers when necessary and ensure that they adhere to the terms set out in the agreement. 

If you need legal advice relating to your suppliers, our experienced startup lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions