Looking Ahead with Your Supplier
Well defined contract terms are the foundation for any successful supplier agreement. However, many organizations fail to look ahead for years to come. Sure, your contract may be built on favorable terms today. What happens five or ten years from now? Every company should have a process in place to lessen the risk of rising contract costs. Streamlining your organization’s invoice monitoring and contract management will help prevent higher rates in the future.
A centralized department or designated staff member should be identified for maintaining supplier contracts. The specific department or appointed person should check for supplier invoice errors, maintain current contracts and watch for loopholes which allow price increases to occur. Renewal dates should always be top of mind, for instance. Your organization may have an agreement with your supplier to auto renew your contract at a higher rate than before.
Bid For New Suppliers
Although a lasting relationship with your supplier may be beneficial, beware of complacency. Your supplier could be using your company’s loyalty to their benefit. As a result, you could be subject to rising costs. There may be a great benefit to explore the options to see what other supplier can offer. Keep an RFP prepared to send out in case you need to bid for new suppliers. In addition, ask your supplier what new technologies they have in the pipeline. Innovation is critical for maintaining current supplier relationships and creating new ones.
Whether your company is starting a new agreement with a supplier, maintaining your current relationship or beginning a new bidding process, proper planning is important. Ask your suppliers the tough questions. Implement thorough and proactive record keeping processes. Then, you will be poised to operate under the most favorable contractual conditions.
Download our full Becoming Best in Class whitepaper today to gain additional insights for implementing best practices for your supplier relationship.