Category Archives: Supply Chain

What damages the reputation of our business?

Suppliers or vendors are the lifeline of a business. They provide us with materials, parts, accessories, products and services which help the business in carrying out operations to manufacture our products and satisfy our customers’ needs. The success of the business depends a lot on them.

But, we must check : are these suppliers being treated well by our people? Are they considered as the lifeline of the business?

Often not. One sad and unpleasant aspect is the supplier payment process. I have seen some suppliers’ representatives repeatedly following up or visiting their customers’ business places for collecting their over due payments. And they are often told to come back after few days. Payment to suppliers, vendors or service providers is one thing some companies want to delay as much as possible on some flimsy reasons.

This is one ugly patch on the company’s reputation. Some may argue that paying always on time is only possible by the rich companies who have deep pockets. Actually, it is not a funds flow problem. It is more of an attitude and values related problem. If there is funds crunch and the company is passing through lean times, it is understandable that the payments may be delayed for some time. But, when the cash flow is not tight and the company has enough funds to make the payments, such treatment is detrimental to the health of the company’s reputation.

Some companies have very fair and excellent method of processing supplier payments. They send the properly due dated cheque to the supplier well before that due date and confirm that the cheque was received before it was due. Vendors love to work for such customer companies and give them best goods and services.

On the other hand, in some companies there are some characters in the company’s payment process, who enjoy the sadistic pleasure in making the suppliers’ life miserable while getting their due payments. These companies are hated by the suppliers and they look forward to getting rid of such customers as soon as possible. When they get a chance to supply to a competitor, they would not hesitate doing so and will switch loyalties immediately. No wonder, our people in charge of payments made them do so…!

If we have sustained support and cooperation from our suppliers, we can build a quality reputation on the foundation of this relationship. Suppliers can help us in achieving true competitive advantage. So, if we wish to build long term relationship with our customers, we must also focus on establishing long term relationship with our suppliers as well. For that, we should not make them beg for their dues. Nobody likes to beg for payment after giving us goods and services. Beggars may not have choices, but our suppliers do have choices. Our competitors may welcome them with open arms.