Challenges and Benefits of Buyer Supplier Relationships
Originally published on December 08, 2020
Collaborative buyer seller relationships are an important element when it comes to successful fleet procurement. For the procurement process to run smoothly and harmoniously, you need to build and manage relationships within your department, with colleagues and with your buyers and suppliers. Here we explore what collaborative buyer seller relationships are, four key challenges and benefits of the buyer supplier relationship.
What is the buyer and supplier relationship?
The buyer and supplier relationship is important for collaborative and effective supply chain, ensuring that your department runs successfully. A positive buyer and supplier relationship is extremely important to build a long term working relationship that’s friendly, trustworthy and gets stronger through effective communication. When the buyer and the supplier are both transparent about short and long term goals, each party, in turn, can help each other to achieve these goals through a mutually beneficial relationship. Getting to know your buyers and suppliers on a personal level, outside of work, will help you to build trust and grow a long term collaborative buyer seller relationship. However, these relationships can take time to build and won’t happen overnight.
What are the benefits of buyer supplier relationship?
1. Effective communication and trust
For a mutually beneficial buyer and supplier relationship, communication is important for the procurement department to run smoothly. Open, honest, two-way communication not only helps each party to understand the other businesses needs but helps to build trust. Trust leads to a healthy and collaborative buyer seller relationship, which can be beneficial for each party, such as sharing industry knowledge or discussing seasonal peaks and troughs in demand.
2. Reduced costs
A positive relationship can lead to reducing procurement costs, as once the relationship has been built, the supplier may favour your business and offer you incentives to ensure that you stay as a customer. For example, a supplier may offer your business a discounted rate on stock or a reduced delivery cost, helping the procurement department to work closer to their budget.
3. Increased efficiency
A key benefit of collaborative buyer seller relationships is the opportunity for increased efficiency, as both parties come to understand the other businesses needs and how they work. This means both parties may be able to help each other through reduced lead times, reduce waste or come up with a solution to improve business operations.
Having built a strong buyer and supplier relationship, your supplier may look for advice by discussing their concerns with you; such as rising fuel and transportation costs. In response, your department can suggest fuel cards for their fleet, to reduce travel costs, monitor their fleet’s fuel usage and as fuel cards are a cashless option for their drivers, this reduces time spent on administration. As you’ve helped the supplier, in turn, they should help you out.
4. Streamlined supply chain
For a more efficient buyer and supplier relationship, both parties want to get to the position where you’re comfortable enough with each other to be open and honest if there’s an opportunity that each of you could help each other with. In turn, this streamlines the supply chain; for instance, there may be an opportunity to outsource tasks to suppliers such as taking inventory levels.
What are the challenges facing buyer supplier relationship?
1. Preferred methods of communication
For a strong buyer and supplier relationship, communication is key. However, collaborative buyer seller relationships aren’t always easy to create. Between the procurement department and the buyers and suppliers, you will all need to find common ground for the best methods of communication. Your department may find multiple emails a day easy to deal with. In contrast, your buyers and suppliers may prefer communication once a week via email, telephone or video call software such as Zoom or Google Hangout. A situation of over-communication can deteriorate working relationships, so it’s important to find the right balance.
2. Lack of transparency
If the buyer and supplier relationship isn’t open and transparent, this can lead to a misunderstanding of business needs. If the correct information isn’t shared between each party, this can mean that vital business opportunities could be missed.
3. Supply chain disruptions
External factors outside of your control can lead to problems in the supply chain. Whether that’s a late delivery or a dip in the quality of the good or service; these are disruptions that the procurement department haven’t prepared for. These may be rare occurrences; however, they can put a strain on the buyer and supplier relationship and lead to conflict between the procurement department and your buyers and suppliers.
4. Mismatching business culture
A business’ culture is at the heart of business operations. Hence, for collaborative buyer seller relationships, both organisations need to have cultures which align and not conflict with one another. No matter how hard either party tries to make a relationship work, sometimes buyers and sellers don’t align, and it’s best to explore the market for an alternative buyer or supplier.
Managing relationships is one of the key areas for successful fleet procurement. For further effective fleet procurement tips, please check out the rest of our blog or to find the right fuel card solution for your business, discover our range of fuel cards.