How to Build a Strong Amazon Supplier Relationship

Your relationship with suppliers is central to the success of your Amazon business. The team at Kickfurther shares strategies for building a strong Amazon supplier relationship in this guest article.

Building a strong Amazon supplier relationship is key to creating quality products. Why? Because when you have strong supplier relationships, you are more likely to get access to new products in development, a higher level of personalized service, preferred pricing, and even special terms. These elements combine to contribute to higher overall product quality.

When you consider that a report from First Insight found that 53% of customers rate quality as the most important factor when considering a product, high-quality products mean more sales and a stronger business.

Tips for Improving Your Amazon Supplier Relationship

One of the first steps toward increasing the quality of your products is increasing the quality of your suppliers. When you view your suppliers as relationships versus seeing them strictly as vendors, you have made a key step in filling your supply chain with reliable, effective, high-quality partners.

The following tips will help you strengthen your supply chain management and create products your customers will love.

Stick With a Few Key Suppliers

Sticking with a few key suppliers that you build deeper relationships with allows you to better capitalize on those connections when you need them. If your supply chain is large, this may seem especially difficult. After all, on average, a company that spends $1 billion in supplies will have around 3,000 suppliers. That’s a lot of supplier relationships to maintain! However, most experts will agree that you're likely spending 80% of your budget with the top 20% of your suppliers anyway.

It’s an easy thing to evaluate. Simply run a spend report for the past three to five years and calculate the percent of the total for each of your suppliers. Once you identify your top suppliers, you have your list.

This exercise will also help you identify potential problems if you’re dealing with international sourcing. It’s recommended that you expand your international supplier base a bit more to mitigate risks from political instability or natural disasters. According to Supply Chain Review, about 55% of overseas suppliers would not be able to maintain their workflow during a disaster, so it’s important to prepare for the worst.

Understand How Your Suppliers Work

Developing insights and an understanding of your supplier’s workflow has several benefits as highlighted by the Harvard Business Review. Doing this shows respect for their business and also highlights a commitment to co-prosperity. It demonstrates that you're focused on developing a relationship where both of your companies can profit.

One example of this practice in action comes from Toyota as the company has an entire supplier relationship management team. This group conducts regular company-to-company reviews in order to better manage any concerns, needs, or requests so that Toyota and all of its suppliers are on the same page and working as partners. Inventory management tools and services to track inventory, such as RestockPro by eComEngine, Cin7, Ordoro, Fishbowl, or Veeqo are great resources for this.

Talk Through Misunderstandings

When the inevitable misunderstanding or problem occurs with a supplier, dialogue is the key to a successful resolution. Perhaps they provided you with a batch of faulty ingredients or you’re struggling with cash flow or payment collection problems. Regardless of the issue, being open and honest avoids causing it to escalate and prevents permanent damage to the relationship.

Working toward a resolution that will make both parties feel secure is a vital part of the supplier relationship management process. Inc. published some worthwhile tips from a former FBI negotiator for staying calm and on point while communicating during a crisis. Even though you're not entering into a negotiation to the degree that the FBI might face, remaining calm and focused can lead to more successful communication in general.

Provide Feedback to Boost Supplier Relationships

When feedback is shared consistently and includes a supplier’s successes and shortcomings, it is received as just another part of the supplier relationship. It also demonstrates a commitment to partnership. Honda does this by sending a report card to its suppliers every month. This simple document highlights the quality and quantity of the supplies it ordered so that suppliers can make adjustments and improvements.

Doing this allows suppliers to work on fixing issues in a more timely manner. You may also want to consider a periodic SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to determine what’s working, what isn’t, and how to change that.

It’s true that a company the size of Honda may have more clout and their feedback more quickly accepted than a newer company. But providing fair, open feedback and asking how you can help close the gap on any items will help you optimize your supplier relationships regardless of your size. Remember, no company sets out to provide a poor product or experience, so if you feel you’re receiving one or both of those things from your supplier, it’s likely that there’s a miscommunication in expectations that can be resolved with a fair, detailed conversation.

Meet Your Suppliers Face to Face

Despite being in a digital world where email and text dominate, consider taking the time to meet your suppliers in person.

With digital communication becoming the dominant medium, taking time to meet them face to face can prove to be an incredible relationship builder.

It need not be a lengthy visit. Something as simple as a factory tour and lunch goes a long way. While you’re there, try to get to know a bit more about them personally and then use that to build on the relationship.

Act With Integrity and Honesty

As with any relationship, suppliers that trust you will treat you more fairly. Resist the urge to use even a little white lie to move a supplier to act. Always be reasonable and treat everyone with integrity and you’ll find that they're more likely to do the same with you. And don’t be afraid to cast light on challenging situations. Just remember, try to focus on solutions rather than problems.

Be Mindful of Cultural Differences

Regardless of whether you're working with local or international suppliers, getting to know your supplier’s cultural nuances will help you build a solid relationship. Understanding how they perceive respect and where they draw boundaries can be accomplished by asking questions and listening attentively. This can help you build a good rapport and solidify your relationship for the long term.

Forge a Lasting Partnership

Remember, your relationship with suppliers is a two-way street. As long as you treat them as a partner rather than a subordinate, you should be progressing toward a customer-supplier relationship both parties value for their ongoing success.

Fair, well-timed feedback with the offer to receive input on your half of the relationship should lead to two professional parties working together toward a mutually beneficial relationship.