Tips to A Positive Relationship with Suppliers

In a world of different suppliers, it's important to have a positive relationship with them. After all, suppliers are a crucial part of any supply chain and if they are strong, you are strong with them and, together, you can accomplish goals.

Here are some tips that are currently being implemented in Casa Sauza, which have helped maintain a high delivery rate to our clients.

Communication

In any relationship, communication is very important. Here in Sauza we work with a weekly email called OPOR, or Open Orders. Every week, on the same day, the open orders file is sent to the suppliers and they're given a certain amount of days to respond. With these emails, we let them know what we need, based on our production schedule and we also let them know the amount that we need. This is important because it allows them to make decisions. If something happens to their plant that week, they'll have the necessary elements to decide what to produce and how much to produce, without affecting our production schedule. Also, by sending it systematically, you are giving them enough time to send feedback in a timely manner.

Vision

It's important for your suppliers to have overview of your production schedule in order for them to have the necessary raw material and production slot. I am not telling you to share all your secrets with them, but let them know what you expect from them in the upcoming months.

Here in Sauza we work with purchase orders and forecast.

• The purchase orders are made to give the suppliers an overview of the next two months
• The forecast gives them an overview of the third month.

The purchase orders are created with one month of a fixed production schedule and the second month is based on forecast. This helps to build trust by using an agreement between suppliers and client that will let the suppliers know that, if you ask for something, you must be able to get it. This is also more formal than just sending a regular email saying that you'll require those goods.

The third month is based on a rolling Forecast. This is very important during seasonal changes or promotions that you may have. You, as an integral part of procurement, cannot control the demand but can indeed work with the supplier to anticipate any needs that you may have and avoid thus, using the word "urgent".

Strategies

With a vision in place, you can now design strategies with the suppliers. We apply several strategies here in Sauza with our suppliers. With some suppliers, we have a Kanban strategy for materials with high rotation, which they are constantly replacing based on a stock quantity. We also work with safety stocks and make to order items. Each supplier and type of material that you purchase from it is different, so the strategies are based on the type of material and supplier.

Listening

Listen to your suppliers. They will tell you important information. Even if it's important dates, such as plant shut downs or special holidays, listen to them. This information should then be passed down to your planning team so that both procurement and planning areas work together to avoid any rush costs or worse, failed delivery to the final client.

Last but not least, pay your suppliers on time. They go above and beyond to assure you an excellent service and the least you can do, is to have an organized payment method. If the payment terms are of 30 days and the suppliers:

Followed the necessary steps to upload their invoice
Delivered the goods or services according to the PO

Everything will flow smoothly and they will get paid automatically at the end of their payment term. If something happens during the process that won't allow you to pay them automatically, work efficiently with your finance team to proceed with the payment in a timely manner.

I hope these tips can help strengthen the relationship between you and your suppliers. Remember, your suppliers are a crucial part of your supply chain and it's up to you to work with them to guarantee their success.