5 mins read

Supplier Relationship Management

5 Tips On How to Improve Supplier Relationship Management

by Yooz the 01.5.2022


American John Henke said it best when, after piloting an annual study on supplier relationships, he concluded: “Our research shows that it is of economic benefit to both the customer and its suppliers to develop good, trusting relationships.” The reality is that although all companies from the smallest start-up to the largest enterprise have many things in common, one of the most important of these is the supplier.


No business can operate without a supply chain in place resulting in the supplier relationship management (SRM) being a make-it-or-break-it strategic priority. For this reason, many companies implement a SRM program to track supplier contributions to the business over time, rate communications, and spot inefficiencies before they lead to significant losses or to a soured relationship. The good news is that regardless of how critical the product, need, or services are to your organization or the existing strength of the association, there are ways to ensure that every relationship remains both positive and profitable.


Here are 5 tips to creating an optimized supplier relationship:


1.      Communicate clearly


Clear communication is the foundation of any successful relationship, especially of that with your suppliers. If you put the time and effort into developing effective, efficient ways of communicating with each other right from the start it will avoid pitfalls in performance and service throughout your entire business relationship.


For example, if a payment is going to be late you should let your supplier know about it as soon as possible. Instead of having a negative impact on your relationship this type of straightforward and prompt communication will be appreciated as it gives them time to plan around any delays. Of course, you want this type of communication to be the exception rather than the rule!


2.      Manage expectations


Whenever signing on a supplier ensure that all the stakeholders on both sides (manager or otherwise, manufacturers or vendors) have a clear understanding of exactly what the agreement will entail. Both your team and theirs should know what is expected of them especially in terms of deliverables, key performance indicators (KPIs) and which lines of communication to follow.


Knowing all this in advance, combined with regular status updates between the designated points of contact, will prevent misunderstandings that could otherwise be costly to your pocket or threaten the overall health of your supplier relationship.


3.      Give each supplier personalized attention


Just as every person is different, so are suppliers. Ensure that your organization builds a personal relationship with every individual supplier regardless of size and can address their unique needs. If necessary, assign a customer service representative to each account to ensure that they’re well looked after.


In this age of global supply chains and digital business, a dedicated representative can help build a positive and productive relationship that’s culturally sensitive and has a personal touch – even if you’re sourcing as an enterprise. This attention to detail will be noticed and pay off over and over.


4.      Recognize your interdependence


Poor management of your business relationship can have long-reaching effects and possibly be detrimental to your business. For example, while a company may occasionally extend supplier refund periods to cover their own capital requirements, turning this into a regular management method can threatens the entire supply chain. This is especially true when working with smaller businesses that don’t have enterprise-level reserves and are therefore more dependent on that cash flow.


While late payments can negatively affect your relationship with suppliers or result in additional costs due to fees, in reality you risk losing them from the supply chain completely (especially if they end up closing their doors). Recognize their success as contributing to your own and do everything possible to support them. The result will be a productive, long-term, and mutually beneficial business relationship.


5.      Pay promptly


While supplier relationship management is about more than just money, even the best relationships will sour unless accounts are promptly settled. As previously mentioned, the very survival of some businesses relies on a dependable income flow. In the case where late remittance is unavoidable – it happens – ensure that you communicate this promptly and do your best to avoid any invoices slipping through the cracks.


AP automation can help improve supplier relationships


Clear communication, managed expectations, personalized attention, interdependence, promptness… Smoothing navigating all of these is key to SRM success. However, a manual Accounts Payable (AP) process can just as easily jeopardize all the work. Simply by having multiple touchpoints and time delays a manual process increases the likelihood of issues arising and the occurrence of a revolving payment catch-up game. Implementing an automation solution will help to settle accounts quickly and may just be the missing factor that improves your supplier relationship.


Accounts Payable Automation gives you full control and transparency over your procurement process at anytime from anywhere. With just a few clicks all documents and communications related to a particular supplier process become available and there is minimal to no chance of an invoice becoming lost. An additional benefit is the elimination of both fraud and risk. An intelligent automated system is quickly able to extract, check, and reroute as needed and provide a security check that may otherwise be lacking.


Not just online but cloud AP automation technologies in particular facilitate the interpersonal aspects of supplier relationship management. The need for physical space or hardware maintenance is eliminated, increasing process efficiencies, reducing costs, eliminating risk, and allowing for greater efforts towards strategy versus daily operation.


In conclusion, although all of the above may seem like a great deal of work, in reality these tips can be one of the best and easiest strategic low-cost business decisions that your organization can make. Improving your supplier relationship and use of even a basic SRM system will optimize your supply chain, strengthen your relationship, and the business value well repaid in both the short- and the long-term.



Manual processes count for over 30% of AP costs and seriously put your company at risk (such as late payments, long invoice approval times, etc.) In this webinar replay, find out about the next generation of AP automation that makes high-performance technology accessible for all.


CTA-UK  Private Demo

    Automate Purchase-to-Pay Process with Yooz to Boost Supplier Relationship Management

    Automate Purchase-to-Pay Process with Yooz to Boost Supplier Relationship Management



    Automate Purchase-to-Pay Process with Yooz to Boost Supplier Relationship Management