Managing supplier relationships requires good communications and relationship skills. Good customer-supplier relationships are not only good business practice, but also provide business success and measurable return on investment. The capabilities required in supplier relationship management (SRM) have been compared to those identified as essential in a sales organization for managing customer relationships. Here are four things purchasing and supply managers can do to help build and improve supplier relationships:

1. Listen. Relationship management depends upon a two-way flow of information between the customer and supplier organizations. Good, active listening skills are essential. Stephen Covey said this in well in habit #5 in The Seven Habits of Highly Effective People: “Seek first to understand, then to be understood.” This sets the tone for constructive interactions and problem solving. Suppliers may say things that a buy-side manager does not wish to hear because they are critical of the customer organization or does not believe are true. Sometimes just listening without responding and without judging not only helps a supplier be heard, but can surface real problems that the customer needs to address.

2. Ask questions. Good communications involves active listening. This means asking questions and probing to understand the dimensions of problems so that they can be addressed.

3. Build trust. Trust is built, not prescribed. Trust takes 2 parties to build. Trust is built on ethical business practices and fairness. The initial interactions and negotiations between customer and supplier can set the tone either for trust or mistrust. To quote George Washington, “Be courteous to all but intimate with few; and let those few be well tried before you give them your confidence.”

4. Build the bonds that withstand stress. This is part of relationship building. Trust and communication established early puts a human face on the customer and supplier firms that helps build the relationship and helps it weather the inevitable disagreements, issues and challenges that arise.

-Sherry R. Gordon