Strengthening vendor relationships can pay dividends

Nigel Crunden, business specialist at Office Depot, suggests that a long-term approach to business relations is beneficial. Here, he explains why.

With the catering industry as a whole generating billions of pounds in turnover for the UK economy, it makes sense for catering equipment manufacturers, resellers and distributors to generate as much value as possible from their commercial relationships with individual vendors.

This obviously benefits them as individual businesses but also significantly contributes to the agility of the sector as a whole.

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Securing the best price and ensuring equipment is of a high standard is naturally a core priority for providers. However, ensuring that this continues in the long-term can be better guaranteed by maintaining a balanced and healthy working relationship with vendors.

A mutual understanding of each other’s businesses is a crucial component of suppliers going the extra mile, as this increases the likelihood of a contract renewal.

The first priority is for catering equipment providers to ensure that their vendors have an inherent understanding of the challenges providers face on a practical, day-to-day basis.

For example, CESA has recently complained that a number of its members are having good quality equipment substituted by cheaper alternatives at the last minute in order for clients to save money and maintain healthy profit margins.

The role of the equipment supplier here is to persuade catering business customers that taking this route will be more expensive in the long-run due to the shorter shelf life of poor quality alternatives. By only sourcing from a few key vendors that sell a wide variety of superior quality equipment, suppliers can potentially procure at a lower cost bracket and pass on this saving to their customers.

This is where agreeing the terms of the vendor-equipment buyer relationship from the outset can pay dividends. By agreeing a set of key performance indicators (KPIs), a strong stance about the level of expected service and product quality can be made and be a lynchpin of the relationship in the long-term.

This means that only those vendors willing to grow with their catering equipment-focused customers in the long term should be selected.

For larger equipment providers in the food management sector, it can be easy to lose sight of the whole supply base when dealing with numerous vendors.

Working closely with them through maintaining regular contact ensures that sourcing issues can be quickly identified and addressed so that service levels are not compromised.

Again this is easier to control when just a small number of vendors with diverse offerings are selected. Responsible businesses understand that it can be detrimental to hide parts of the supply base, and this is where a thorough understanding of a vendor’s business dynamics and sourcing strategies needs to be properly verified from the outset and regularly checked throughout the relationship’s duration.

Demonstrating the ability to source equipment sustainably is a crucial component of being a forward-thinking provider with its sights set on longevity. The only way to facilitate this is to work with vendors with the same outlook, again an important factor to verify at the beginning of the relationship.

In conclusion, supply chain matters should not be taken lightly by equipment providers but instead seen as prime opportunities to facilitate growth. This can only be achieved through working with a small selection of vendors that offer a high-quality, ethically sourced offering and genuinely want to add value to the relationship in the long-term.

Quick fix supply chain solutions are never a good idea: instead it is best to carefully source vendors and ensure the parameters of the relationship are firmly set in stone from the outset.

 

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