The Importance Of Having Good Relations With Your Electrical Parts Suppliers
Many factors contribute to the success of a business, and one of them is how you relate with other players in the chain. Of course, customers are considered the main stakeholders in every company, but the suppliers are equally important. They’re the ones who make sure your customers’ needs are met on a consistent basis.
If you have an electrical supply store, for instance, there are specific items that should be made available to your clients everyday, else you’ll lose potential customers. Working with the right suppliers ensures that these demands are met, which gives you a competitive advantage in the market.
With that said, maintaining good relations with your current suppliers can have a significant impact on your business success. Here’s why:
- Significant cost reduction
For any entrepreneurial venture to bring in maximum profits, the cost of operation needs to be as low as possible. These expenses are divided into two: fixed and variable. The cost of raw materials, ready-made goods, and other supplies fall in the latter category. That means having a supplier who can supply goods at a favorable price will have a huge impact on your overall success. (1)
But how do good supplier relationships reduce these costs? Partnering with a reliable player in this chain gives you the opportunity to strike a great long-term deal, which can significantly lower the costs incurred throughout that period. Such relationships may also lead to more preferential rates that’ll be beneficial for both parties.
Another advantage worth noting is that sticking with one electrical supplier saves you the hassle of constantly looking for new partners. Remember, signing a contract with new suppliers comes with a number of initial costs. Avoiding these expenses can cut your operating costs by a significant margin.
- Enhances supply chain consolidation
Supply chain consolidation is one of the most popular chain management strategies in modern businesses. It involves the reduction of suppliers to a number that’s favorable for your company and focusing only on the most successful ones. (2)
Building good relations with your current electrical suppliers gives you a perfect ground for the implementation of this strategy. Of course, having many suppliers may add variety to your goods, but it also comes with a lot of complexities.
You’ll have to track each individual and make sure that they’ve held their end of the bargain. As you can imagine, these tasks are very demanding, both physically and financially. To reduce such supply chain costs, you can have a manageable number of reliable suppliers, which can only be achieved when you’ve built great relationships with them.
It’s also important to note that dealing with few suppliers can reduce risks. Your company will be able to focus on improving other crucial parts of the supply chain, like compliance and other relevant legal policies.
- Improves efficiency in the supply chain
Every successful company knows the significance of supply chain efficiency. A proper flow of goods from the manufacturer to a retailer or wholesaler has a direct impact on customer experience.
Building good relationships with suppliers creates an environment where both parties can adjust to work well together. Having such a scenario in your electrical business will ensure that you meet the demands of your customers in a timely manner.
- Builds trust
Trust between a company and its suppliers or customers is a crucial aspect of any business. Having good relationships with certain suppliers means there is a higher chance that you’re going to work together for a long time.
Such long-term relationships breed trust, which gives you the opportunity to enjoy other benefits like outsourcing activities. For instance, you can outsource inventory responsibility and other relevant non-core activities to the supplier. Doing so will free up part of your workforce, which is one way of enhancing the overall productivity of your business. (3)
Just like customers, suppliers play a crucial role in the success of your company. Running an electrical supply store can be quite demanding, especially because you have to source electrical spare parts on a regular basis. Building good relationships with suppliers in this industry will ensure a constant flow of these goods, which is a good thing for the business and your customers.
Good company-supplier relationship can also significantly reduce the operating costs. Apart from enjoying more preferential rates, it also allows you to avoid the need for new suppliers every now and then, which can be very costly. Improved supply chain efficiency and enhanced trust are other reasons why you should consider building great relationships with your electrical parts suppliers.