In the consumer goods industry, the product is the business. That’s how it is here at Boosted: without products, there would be no business. Yet, manufacturing the products we need to keep our business up and running is beyond the scope of what we do, and it’s probably beyond yours too. The only reason our products get to consumers is because of our vendors -- no vendors means no product, which means no business. Which is why our vendor relationships are so important.
Having good vendor relationships isn’t just about improving the bottom line, either. It’s a sign that your interactions matter at every level of the business, which not only speaks well of the business itself but raises the value of the company. Having a good relationship with vendors reduces volatility at a key chokepoint that could bring business to a standstill. All of which means, if you ever decide to sell your business, it will increase the sale price. This is because you have another transferrable asset: your relationship with your vendors. It’s a major piece of the puzzle you bring to your sale because the acquiring company doesn’t need to worry about finding a new vendor to source the necessary materials or products. You have a trusted vendor with a history of on-time fulfillment, and that increases the value of what you have to offer.
Vendors should be a direct extension of your company -- that’s how we see them, anyway. They should be just as happy as your end customer, and you’d better do something about it if they’re not.
From the first conversation you have with a vendor, you want to make them feel as comfortable with you as you are with them. Get to know each other, explain who you are, what you do, why you do it, and what your expectations are for the relationship. Don’t be afraid to visit them and learn everything you can about them, from the ins and outs of their operations to their people to the product capabilities and overall production capacity. By providing a transparent courtship, as it were, you build trust and respect in the relationship. You’ll learn from each other and grow together.
As the relationship develops, you’ll find new ways to support each other, build each other, and compromise by creating new products or finding better ways of working together. It really is like a marriage in a lot of ways, and just like a marriage, you’ll work together to create the future of the partnership, a partnership you don’t want to end in divorce.
The initial courtship can be a whirlwind -- quarterly visits, weekly or biweekly calls, ensuring fulfillment from the vendor -- but the work doesn’t stop once a relationship has been established. There’s one fundamental tool every seller should have to make sure their relationship doesn’t sour: the vendor scorecard.
Think of it as an annual health checkup. For example, our scorecard measures various KPIs. We look at finances, product testing and overall compliance, and on-time, in-full deliveries. This gives us a snapshot of the vendor’s performance, which gives us a clearer picture of whether or not we’re actually working with best-in-class vendors who will support our business growth strategy. But the only way this happens is by measure the partnership’s performance. We can then make rational decisions on managing our inventory, allocating resources, and further partnering on more product development. It also lets us know who isn’t performing up to snuff, which could lead to “marriage counseling.” Overall, it helps create a sustainable relationship through regular re-evaluation.
The bottom line is that vendors affect the bottom line. It may not be obvious how improving your vendor relationships increases sales, but if our experience at Boosted is any indication, there’s absolutely a correlation.
When you can trust that your inventory will arrive on time, you’re able to provide better customer fulfillment. When you understand your vendor’s side of the business, they can help you foresee problems (like supply chain issues). And when you have systems in place that keep your vendor relationships running smoothly, that’s less time wasted. Our vendors and our people are our biggest assets. Without them, we wouldn’t be able to optimize business operations, and without that, we’re leaving money on the table in the long run.
At Boosted, we know the importance of vendor relationship management -- you don’t grow a portfolio this big without understanding a thing or two. If you’re ready to sell your business, trust that our understanding and management of these relationships will help us keep growing what you’ve already built. Reach out to us, we look forward to connecting with you and your vendors.