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If Your Suppliers Are In Trouble, Then You Are In Bigger Trouble!

by David Brock on March 27th, 2009
I usually direct this blog to sales and business professionals, focusing many of the discussions on the “sell” side issues. For this post, however, I want to focus on the “buy side.”

A few weeks ago in Moving Beyond Selling To Building Collaborative Relationships, I cited a PWC CEO Survey in which 71% of CEO’s believed collaborative business relationships were critical with customers, yet only 40% felt these relationships were important for their suppliers?

Talk to any sales person and you will find they are being hammered in their negotiations. Talk to any business professional and they will complain about extended payment terms, returns, defaults, other things.

We’re always able to talk about the great difficulty and challenges business face in working with customers, closing business, and developing true value based relationships. We seek understanding, trust and openness with our customers, so that we can sell them more stuff (I’m only being slightly sarcastic).

Yet, look at the other side of the organization, and we are treating our suppliers in the same manner. We are hammering them, making marginally tenable business deals. To respond, they are reducing service levels, may be reducing quality, reducing delivery commitments, doing everything they can to reduce their costs.

I am all for very tough negotiations and for seeking the most effectiveness and efficiency in the supply chain. But we have to recognize, if it’s a bad (or even marginal) deal for our suppliers, ultimately, it will be a bad deal for us!

As a sales executive, this notion terrifies me—there goes much of the value and differentiation I provide my customers! My ability to compete plummets. As a business executive, this terrifies me, if we aren’t able to design, develop, and build quality product and services, because our suppliers are reducing their service levels and commitments to us, how do we grow the business?

I am distressed by the lack of leadership and insight demonstrated by the respondents in the PWC CEO Survey/ Over 30% of the CEO’s don’t value their suppliers — at least in terms of establishing close relationships! If they don’t value this in the supply chain, how can they expect to develop these with their customers?

I think this is an area in which sales executives can provide some leadership within their own organization. The strength of your supply chain relationships is critical to your own growth and success.

Maybe I should end: “Do Unto Your Suppliers As You Would Have Your Customers Do Unto You.”

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  1. This is an EXTREMELY insightful post. All too often we get in the habit of looking one way, and not taking the time to understand the dependencies in our business. If you short your suppliers, what happens to your product/service?

  2. Dave Brock's Blog permalink

    Dave, thanks for the comment. This is an issue I have been evangelizing with all my clients and whoever will listen to me.

    I think it is an important issue for organizations to be concerned with, and I think sales management can offer a lot of leadership on this.

    As much as you can promote it, embellish the ideas and pass it along, would be great!

    Thanks for dropping by and commenting!

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