Thursday, December 19, 2013

The True and Timeless Value of Customer-Supplier Relationships

by James M. Terhune, President/CEO

The Merriam Webster Dictionary defines the word “relationship” as “the way in which two or more people, groups, countries, etc., talk to, behave toward, and deal with each other”. With the ascendency of technology in the arena of business and commerce, some pundits foresee a future where personal relationships will be as passé as the teletype and the Dictaphone. The soothsayers of business trends read the digitized tea leaves and prognosticate that the instantaneous and virtually continuous exchange of data will make human interaction all but unnecessary. The customers’ requirements for goods and services will be posted to “the Cloud” and the suppliers will, in turn, respond with their offerings and the marvel of electronic procurement will be supported by digital sales and silicon chips. With all due deference to the techno-business gurus, that scenario may seem efficient but it is far from effective. While e-commerce may be acceptable for retail commodity purchases, it is an undeniable fact that industrial procurement will continue to require and highly value solid customer-supplier relationships. The validity of this statement rests on these four essential tenets; flexibility, responsiveness, trust and creativity and these catalysts of a successful buy/sell transaction can only be supported by a person-to-person business relationship.

In the course of industrial procurement, the purchasing agent will most probably be tasked with buying non-standard components or standard products with “special” variations or specifications. Or the buyer will be expected to procure standard items but the shipment of the product must be made in five days, not the typical lead-time of five weeks. In all of these circumstances, negotiation will be called upon to try to reach the desired result. Any successful negotiation requires flexibility. People have the capacity to be flexible; to negotiate through the gray areas of such procurement challenges. Software systems and business algorithms tend to deal only in black and white.

We all seek responsiveness in our business dealings, whether personal or professional. If that were not true, companies would not be toting the promise that when you call them you will speak to “a real person” or making the claim that “customer service is our only business”. But the responsiveness required in a successful customer-supplier relationship transcends these slogans and marketing punch-lines of the retail world. Responsiveness in this context requires active listening to each other to truly understand the requirements that define the purchase and the perimeters that govern the supply. Responsiveness requires a willingness to probe and question to insure that each participant has a complete and clear understanding of the other’s position. Responsiveness requires a sharing of information and acquired knowledge to prevent an oversight or miscalculation. Responsiveness requires mutual empathy which encourages a mutual acceptance of the shared benefit of a successful buy/sell transaction; the iconic “win-win”. Rows of high-speed servers and wireless routers do not engender empathy nor do they excel at active listening.

Trust between buyer and seller is the keystone of the transaction; it is the element that nourishes confidence and security. Trust promotes and encourages future business opportunities. Charles Green in his book “Trusted Advisor” reminds us that “…actions, not words, are the only language of trust.” Green suggests that trust in the business realm is earned when “…you are perceived as working to achieve your goals through helping others achieve theirs.” and when “…you are seen as focusing on the longer term relationship rather than the immediate transaction.” Trust must be earned over time and the development of mutual trust and professional respect is a journey, not an event. People are best equipped to make such a journey.

It was Shakespeare who offered the saga advice that applies to writing plays (and perhaps to writing blogs), “Save the best ‘till last.” Creativity is arguably the most important benefit that all parties, in the customer-supplier relationship, bring to the effort. It is an acknowledged fact that many of the major product innovations and refinements introduced by the industry-leading manufacturers started out as the brain-child of one of their suppliers. A well-established supplier-customer relationship creates a safe and trusting environment that fosters that creative exchange of ideas and “what ifs”. Having the benefit of the talents of your suppliers’ engineers and designers, working to make your products better, is a tremendous advantage to the customer. And, being instrumental in the idea generating process to make your customer’s products better validates your value and worth as a supplier. But without the security and trust afforded by a solid business relationship, the creative fireworks will fizzle on the launch-pad.

The cultivation and nourishment of a meaningful and enduring business relationship between buyer and seller is a challenging and laborious task, and your efforts must be continuous throughout the life-cycle of the relationship. The demands are considerable; tell the truth, truly listen, offer your best advice regardless of who benefits, share your knowledge, practice civility and consider compromise to promote a mutually beneficial outcome. It is hard work to be sure. But if you begin to question the value of the effort required to maintain your business relationships, whether you are the customer or the supplier, remember the saga advice of successful businessman, celebrated columnist and author of the bestseller, “Swim With the Sharks”, Harvey Mackay who observed, “The quality of your life is determined by the quality of your relationships. The quality of your business is no different.” Indeed!