Loyalty management covers the relationships between the company and its 4 principal stakeholders: the suppliers, employees, customers and investors. Of these it is the suppliers who receive the least attention.
This isn’t surprising because the company is the supplier’s customer so the expectation is that it is the supplier who should be striving to make the company a loyal customer – and, of course, the good suppliers do just that.
But loyalty should be a two way street; it is in both the supplier’s and the company’s interests to forge a mutually loyal relationship.
The company can create loyal suppliers by working as a partnership where both are sensitive to the other’s needs. Paying the supplier on time is clearly the first essential but working with the supplier in product design, sharing future plans, keeping the supplier as informed as possible about future requirements making it easier for the supplier to plan his production, are all ways in which a loyal relationship can nurtured.
A little extreme perhaps, but …..
A friend of mine in New York owns a company installing boilers in City apartment complexes. He pays supplier invoices, once approved, within a couple days of receipt. He treats the interest lost by paying invoices 30 days or so early as an investment in creating supplier loyalty, an investment that enjoys a spectacular rate of return.
Why?
Because suppliers (the aware ones) do everything they can to protect and help their best customers. In my friend’s case this means he gets help when he needs a better price for a particular project and he often gets advance information from suppliers about contracts soon to be issued.
The great thing about the Loyalty Management philosophy is that common sense and the Golden Rule are much in evidence and it combines the “Right thing to do” and the “Profitable thing to do”.
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