Tips for Chinese Supplier Management
Chinese supplier management allows you to build a relationship with your Chinese suppliers that will strengthen both businesses. Supplier management is not negotiating the lowest price but constantly working with your Chinese suppliers to come to agreements that will mutually benefit both companies.
1. Share Information and Priorities
The key to succeeding in supplier management is to share information and priorities with your suppliers. That does not mean that you throw open the accounting books and give them user IDs and passwords to your systems.
Appropriate supplier management practices provide only the necessary information at the right time to allow a supplier to serve your needs better. It may include limited forecast information, new product launches, changes in design and expansion or relocation changes.
2. Balance Commitment and Competition
One of the goals of supplier management is to gain the commitment of your suppliers to assist and support the operations of your business. On the other hand, the supplier is expecting a certain level of commitment from you. It does not mean that you should blindly accept the prices they provide. Always get competitive bids.
3. Allow Key Suppliers to Help You Strategize
If a supplier supplies a key part or service to your operation, invite that supplier to strategic meetings that involve the product they work with. Remember, you brought in the supplier because they could make the product or service better and/or cheaper than you could. They are the experts in that area, and you can tap into that expertise to gain a competitive edge.
4. Build Partnerships for Long Term
Supplier management prioritizes long-term relationships over short-term gains and marginal cost savings. Constantly changing suppliers to save a penny here or there will cost more money in the long run and will impact quality. Other benefits of a long-term relationship include trust, preferential treatment and access to insider or expert knowledge.
5. Seek to Understand Your Supplier's Business
Remember, your supplier is in business to make money too. If you are constantly leaning on them to cut costs, quality will suffer, or they will go out of business. Part of supplier management is to contribute knowledge or resources that may help the supplier better serve you. Asking questions of your suppliers will help you understand their side of the business and build a better relationship between the two of you.
6. Negotiate to a Win-Win Agreement
Good supplier management dictates that negotiations are completed in good faith. Look for negotiation points that can help both sides accomplish their goals. A strong-arm negotiation tactic will only work for so long before one party walks away from the deal.
7. Come Together on Value
Supplier management is more than getting the lowest price. Most often the lowest price also brings the lowest quality. Supplier management will focus quality for the money that is paid. In other words: value! You should be willing to pay more to receive better quality. If the supplier is serious about the quality they deliver, they won't have a problem specifying the quality details in the contract.