As tempting as it is to only offer your own custom-made products, customers can often be hesitant of a brand that they have little to no experience of. The sense of consumer choice being taken away can also have a negative impact on your sales. Even Starbucks works with local vendors in different countries to give a breadth and community character to their displays.
When it comes to a café business, suppliers are the unsung heroes of business growth and success. They can have an impact on every part of your business, all the way from reinforcing your brand values, influencing your reputation with customers, and right down to your bottom line.
A study by PwC found that the advantages of supplier relationship management are well-known in business, but that a good strategy is rarely adopted. In this blog post, you will understand:
- The benefit of developing great relationships with suppliers
- How to choose the best vendors for your needs
- Best practices for maintaining a positive buyer-supplier relationship
Businesses often fail to see suppliers as critical to their success. As a result, supplier relationship management (SRM) is neglected in favour of the ‘low-hanging fruit’ such as social media marketing. However, developing a strategic and positive relationship with vendors can give your café business important advantages, going beyond reducing costs and increasing efficiencies.
Here are 3 reasons you should show your suppliers some love:
Customers want the best value for money, meaning your café should provide high quality products at a competitive price. The quality and availability of the food and beverages you sell impact what your customers think; ultimately, unreliable suppliers will reflect poorly on you in the eyes of the customer. When your shelves are consistently well-stocked with great tea and coffee, unique snacks, and tasty drinks your customers love, you’ve won their loyalty and delight.
As your coffee shop business grows, you may decide to expand your product offerings—or even develop one of your own. A supplier is constantly managing products and interacting with people in the market. They are perfectly positioned to provide excellent guidance and advice. When you’ve developed a positive, long-term relationship with a supplier, they will understand your business and know its position in the market, giving them insight that can help you tweak or execute a plan.
Additionally, they will know more about the large-scale trends among consumers (since they are supplying the demand), meaning you can stay on the cutting edge of what’s changing in cafes and restaurants in the region.
One of the best ways to reduce operational costs and improve profit margins is through good supplier rates. Those lower costs can be key to maintaining profits and/or passing on those savings to your customers. Suppliers can change prices, adapt credit and payment terms, or offer discounts for high volume orders or loyalty. A good supplier relationship means more flexibility for you and better value for your customers.
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The key to a great supplier-buyer relationship is choose the right one in the first place. Once you’ve identified and requested bids from prospective vendors, you will need to evaluate each one. Here are 5 characteristics you may want to consider before negotiating and signing contracts with a new supplier:
Contact current and previous customers to learn more about the supplier. You want to know about the timeliness of deliveries, how well they adhere to their contracts, as well as what steps they have taken to resolve issues in the past.
Economising on quality is not always the right strategy. Choose the highest quality products that your customers will be willing to pay for. That last piece is important: it’s no use having expensive snack bars that are vegan, organic, and fair trade certified if your target market doesn’t value those features. When it comes to food and drink, you want the best products that your customers will love.
Be sure to establish relationships with likeminded suppliers your customers will appreciate—and that will draw in your target market. Choosing a supplier whose values are aligned with yours will speak volumes to your customers about your authenticity as a good corporate citizen.
It can take time for a new café to start generating profit, and a good supplier will understand that. You should discuss how flexible they are with contract terms, regularity of delivery, as well as lead times. That will help you remain agile and easily react to changes in your café’s needs.
Your main contact person should be someone you can have a positive, collegial relationship with. Look for someone who is willing to collaborate with you, trustworthy, and empathetic. Those traits are the foundation to a great working relationship.
Businesses know all about building and maintaining relationships with customers, but suppliers are often neglected. Now that you know the impact suppliers can have on your business, here are 5 tips for great supplier relationship management.
We have already established how crucial they are to your business, so treat them as such. A vendor is just as much a part of the social world of your café as your employees and customers. If you work with a custom coffee roaster, shout them out on social media or post their marketing materials around the space so customers can learn more. Invite them to the café for a meeting or offer perks to their staff. Building a personal connection will increase the vitality of the relationship and encourage them to work harder for you.
Life happens, and like everyone, suppliers want to be treated with respect. Instead of keeping mum about issues with the service, speak to the supplier directly. If you’re having cash flow issues, be upfront rather than giving them the run around. If you’re shopping around for other suppliers, just let them know that you’re aiming to reduce risk and the possibility of supply disruptions. In business, honesty and transparency can go a long way to building and maintaining a good working relationship.
Everyone loves a prompt payment! Once you’ve decided on payment terms, don’t take advantage. Timely payments encourage suppliers to deliver on time. Additionally, being a reliable payor means that if you occasionally fall upon tough times, they may be more willing to extend you credit or extra time to settle up.
Maye you underestimated the inventory, or a product has been selling faster than usual—it’s natural to make last-minute orders. Just don’t make a habit of it. Once you’ve chosen a mutually convenient lead time between placing an order and its fulfilment, stick to it. Demonstrate your understanding of their needs and production methods by being respectful of your established lead times.
Just as they can help you innovate, vendors appreciate when you come to them with ideas for new products, alternative uses, and even packaging or marketing ideas. Sharing your thoughts and asking their opinions shows that you see them as a leader and equal partner in developing each other’s respective businesses.
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Once you’ve found a great, reliable supplier who fits in with your company’s mission, treat them like gold! Sometimes a supplier will need to go the extra mile to help you keep your café running smoothly; the better your relationship, the stronger their motivation is to help.
Have you considered how your relationships with suppliers influence the success of your business? Did we open your eyes to something new in respect to supplier relationship management? Let us know in the comments and share your new insights on social media!