Suppliers tend to prioritise larger retailers because of their product stupidity (If a large retailer is not monitored, they often do stupid things), higher spending power and perceived reliability. SMB retailers face problems securing favourable terms, yet SMBs need to establish supplier relationship management despite these obstacles.

Ask your suppliers where your business fits in their priorities. Understanding your position can help you tailor your approach, such as negotiating better terms or diversifying your supplier base.

Diversify Your Supplier Base

Relying on a single supplier puts your business at considerable risk, including stock shortages or price hikes. What you should consider is diversifying your supplier base:

• You reduce dependency risks.
• You gain leverage in negotiations by having alternative options.
• You ensure consistent product availability.
• Have a better pool of products to select from.
• You're not left stranded if one supplier faces disruptions.

Actionable Step: Use your POS system to track supplier sales performance. Could you identify which suppliers are underperforming and explore alternatives to fill gaps?

Negotiate Beyond Price

Negotiation isn't just about securing the lowest price; it is about more. Often, the seller has more flexibility than initially disclosed, but you must be willing to ask first.

What to Negotiate:

• Extended payment terms (e.g., 30-day credit).
• Bulk discounts or promotional pricing.
• Marketing support
• Shipping Terms

For example, I received a huge order and told our supplier I needed a better trading term to help me get the order and fast delivery. I got both. Remember, you can negotiate improved trading terms and expedited delivery by highlighting the mutual benefits for both parties.

Pro Tip: Once you've diversified your supplier base, use their competition as leverage during negotiations.

Conduct Independent Research

Suppliers may present information that benefits their agenda but verify everything independently. Ask your customers, visit similar shops, examine the advertising, use your POS reports, and do Google searches. I find that Amazon's top-selling lists in Australia are beneficial resources. Check here.

These are some items to check:

• Compare sales data between Supplier A and Supplier B for similar products.
• Assess whether each supplier's margins meet your financial targets. Some suppliers hide their margins, which can be a problem. A typical problem is that some quote markup and some margins. Always work in margins.
• Investigate alternative suppliers offering better terms or unique products.

Offer Products at Multiple Price Points

Stocking products at different price levels allows you to cater to diverse customer segments while also strengthening supplier relationships:

• Budget-friendly options attract cost-conscious shoppers.
• Mid-range products appeal to the average buyer.
• Premium items target customers seeking quality or exclusivity.

This strategy not only broadens your market reach but also creates upselling opportunities.

Leverage Technology for Efficiency

Your POS system has an invaluable tool for managing supplier relationships and improving operational efficiency:

• Use the report "Sales Comparison by Supplier" to rate your suppliers.
• Automate reordering processes based on sales trends.
• Monitor margin creep (declining profit margins) and address it with suppliers promptly.

Use Sales Comparison by Supplier

Use the "Sales Comparison by Supplier" report in your POS System. This report will show you͏ the actual figures, and the͏ changes over time for each supplier. By ͏analysing your suppliers, you can gain valuable insights about your shop based ͏on various criteria such as the number of sales, total value of sales, average sale amounts and ͏profit. For example, it is important to determine which suppliers are unde͏rperforming or overper͏forming. Check if they are giving you enough margins to meet your needs.͏

How to Access the "Sales Comparison by Supplier" Report

To access the "Sales Comparison by Supplier" report, follow these steps:

It is in the register sales reports; find the report "Sales Comparison by Supplier."

Click on it, and you will get this screen.

How to Interpret the "Sales Comparison by Supplier" Report

You have a report of your suppliers that shows you the summary statistics for each supplier. They are based on each criterion you selected and a comparison of how you have been travelling with them. The big ones and those with significant movements in the comparison percentages are fascinating.

Look at the profit figure. Today, we are seeing significant downward margin creep. This is an excellent place to see it. There appear to be many reasons for this downward margin, and it seems to be both due to changes in customers and suppliers. I will discuss this in another article.

Now, rerun this report and compare suppliers based on those that handle similar products. Now, compare and contrast these different suppliers based on their performance over time, noting the number of sales and profit.

Build Strong Relationships

Suppliers are more inclined to give more to retailers they see as partners instead of merely vendors.

How to these relationships:

• Please make sure to let them know about your needs and concerns often.
• Pay invoices on time to build trust.

• Show loyalty by prioritising their products when possible.

• Tell them information that they may find helpful.

For example, if a supplier launches a new product line, consider promoting it immediately. This shows commitment and builds goodwill.

Take action Based on Data Insights.

How to Customise the "Sales Comparison by Supplier" Report

To customise the "Sales Comparison by Supplier" report, follow these steps:

Select a period for the report, let us keep it simple so start with the past 12 months and compare it with the previous 12 months. So leave it AS IS and run the report. Afterwards, feel free to explore more options as desired.

Screenshot of Customised Sales Comparison by Supplier Report

Using data-driven insights from tools like the "Sales Comparison by Supplier" report allows you to make informed decisions:

1. Identify underperforming suppliers. Then, address any concerns with them directly.

2. Strengthen relationships with high-performing suppliers.

3. Monitor trends such as declining margins and/or dips in sales.

Example: If Supplier A's products exhibit decreasing margins over time due to increasing costs, renegotiate the terms or consider switching to Supplier B, which has superior profitability metrics.

Challenges and Opportunities

I encourage you to contact underperforming suppliers and express your concerns. Please also inquire about how you can collaborate more effectively with well-performing suppliers and how to do more with them.

Please give it a go and see how it goes.

I understand how frustrating it can be when suppliers change hands. I've been there myself many times. It is a common occurrence that can cause problems for retailers. Let's explore how our POS system can help you navigate these changes smoothly.

The Supplier Takeover Dilemma

When another company takes over a supplier, it often leads to a cascade of changes for retailers. You probably find yourself dealing with:

Account details often need to be updated during a supplier takeover. It is best to obtain the new account details directly from the new supplier's official communications.

However, the most annoying aspect is the potential loss of your sales history with an old supplier. This historical data helps make informed purchasing decisions.

The Importance of Sales History

Your sales history with a supplier is more than just a record of past transactions. It's a goldmine of information that helps you:

• Forecast future demand
• Identify seasonal trends
• Negotiate better terms based on your purchasing volume
• Quickly reorder popular items

Losing access to this data or splitting between the old and new supplier accounts can be a headache as you constantly switch between screens, trying to get a complete picture of your ordering patterns.

The Solution

Luckily, your POS system has a solution. It safely puts the old supplier's information in the new supplier's account. Here is how to do it:

1. Navigate to the Creditor Maintenance section of your POS system.
2. Look for the Merging option.
3. Enter the details for both the old and new supplier accounts.
4. The system will move the relevant information to the new creditor account.

The account details will only be automatically transferred with your explicit approval.

Benefits of Merging Supplier Information

By using this feature, you'll enjoy several benefits:

Consolidated History

All your historical data will be in one place, making it easier to analyse and use for future ordering.

Time Savings

You won't have to flip between screens to get a complete picture of your ordering history.

Improved Accuracy

With all information in one place, you're less likely to miss important details when placing orders.

Better Reporting

Your reports will now include the entire history of this supplier, giving you more accurate insights.

Best Practices When Merging Supplier Information

To make the most of this feature and ensure a smooth transition, consider these tips:

Double-Check Information

Before merging, verify that you have the correct supplier details for the old and new accounts.

Communicate with Your Team

Ensure your staff knows about the change and how it will affect their use of the POS system.

Keep Old Records

You never know when you will need information on your old supplier records.

Please get in touch with our support team if you need assistance managing supplier changes in your POS system.

We're here to help you.

Enjoy.

Suppliers occupy a unique position in our business ecosystem. They're crucial – after all, they provide the products we sell. However, their priorities may not always mirror our own. Navigating this paradox is a skill that can set your business apart.

Pros: The Supplier

Suppliers often hold a wealth of knowledge about:

• They know a lot about the products.
• Suppliers' agents travel, and they know what is happening in the market and the trends.
• Suppliers are better briefed as to what is happening with their market
• They know what your competitor's strategies are and what they are doing.

They may be able to offer you a better deal.

This information can be precious, but it's up to us to tap into it effectively.

Cons: The Supplier

• A supplier rep will tend to prioritize their company's interests over yours, potentially leading to biased advice or recommendations.
• They do not have a comprehensive view of your business needs
• Over-reliance on a supplier might limit your ability to negotiate effectively with other suppliers.
• Managing relationships with supplier reps can be time-consuming

It's important to note that these are potential drawbacks and the actual impact would depend on how the relationship with the supplier representative is managed within the broader context of your supplier relationship management strategy.

Supplier Relationship Management

This requires supplier relationship management (SRM), which isn't just some fancy term by business consultants.

It's a critical strategy for any business, but we need to answer one crucial question:

What importance does each supplier hold for your organization?

The Data Goldmine of Your POS System

Here's where your POS system becomes your secret weapon. In seconds, you can determine this information about your suppliers' performance. Here is how you do it:

1. Open your POS system.
2. Navigate to Cash Register Reports > Sales - Stock > Supplier Stock Sales for a Given Period.
3. Select the last financial year
4. Hit that 'Generate Report' button

In seconds, you'll have a detailed summary of sales by supplier. You can see precisely how each supplier contributes to your bottom line.

Here are the key areas to focus on:

Quantity Kings: Bringing in the Crowds

Look for the suppliers topping the 'Quantity' column. These are your traffic drivers whose products people are coming to buy from your shop. This is what is bringing customers into your shop.

Profit Champions: Paying the Bills

Next, check out the leaders in the 'Profit' column. These suppliers might not sell the most units but contribute significantly to your bottom line. They're the ones keeping the lights on, and the staff paid.

Putting the Data to Work: My Personal Experience

When I ran this report for a customer, they were shocked to discover that one of their small suppliers was so profitable. They had been focusing all their energy on others and neglecting this hidden gem.

Armed with this information, they actually:

1. Renegotiated terms with this top profit-generating supplier
2. Allocated more shelf space to their products

The result? A 14% increase in profitability in just a few months.

In Conclusion: The Data-Driven Path to Supplier Success

In our current retail ecosystem, instinct-based decisions are increasingly obsolete. Leveraging your POS system's data with relationship-building solid prowess can elevate supplier interactions from mundane necessities to crucial differentiators.

Don't underestimate your POS system – it's not merely a cash register. It is so much more. Consider it a powerful business intelligence platform. Take the plunge, run those reports, and unveil unexpected supplier insights. You might stumble upon a hidden asset.

Frequently Asked Questions about Supplier Relationship Management (SRM)

What is meant by supplier relationship management?

Supplier relationship management (SRM) is a systematic approach to evaluating and partnering with suppliers. It involves assessing suppliers' strengths, performance, and capabilities to your overall business strategy. SRM aims to maximize the value of supplier interactions by creating closer, more collaborative relationships with key suppliers to uncover new value and reduce the risk of failure

What are the 5 key points of SRM?

While there isn't a universally agreed-upon list of 5 key points, we can identify these crucial aspects of SRM:

1. Supplier segmentation and classification
2. Supplier strategy development and execution
3. Performance measurement and feedback
4. Collaboration with suppliers
5. Continuous improvement of your dealing with your suppliers

What are the five types of supplier relationships?

1. Buy the market relationship
2. Ongoing relationship
3. Partnership
4. Strategic alliance
5. Backward integration

What are the three basic components of supplier relationship management?

We can here identify these core elements of SRM:

1. Supplier evaluation and segmentation: Assessing suppliers' strengths, weaknesses, and strategic importance to your business

2. Relationship development and management: Cultivating personal relationships with suppliers and building trust and mutually beneficial partnerships

3. Performance monitoring and improvement: Continuously tracking supplier performance, providing feedback, and working collaboratively to enhance the relationship and outcomes

If you are serious about selling products like gifts, you need to buy much of your products directly.  This means overseas. 

If you are not what you will find, your supplier buys it for X and sells it to you at X plus extra, so you have to sell it to make a profit for X plus a lot more.  Then what you will often find is that the gifts you have are not particularly difficult to get. Many other shops are selling what you have.  So you do not get much margin. 

The ones that make good profits in the gifts industry specialise in a product line and import direct.  

Now it is a bit harder to buy overseas, but it is also more profitable. This is because of the recent movements in world currencies. It also depends on when you or your supplier has paid for the goods. Plus how much they have in stock and their movements etc. This is why the difference in prices on offer for the same goods often are now huge.

So my tip is now is a good time to shop between suppliers. 

One site I recommend which has everything is Alibaba.  Look at what you are buying now and see what you can get it there. Do not be afraid to bargain with them over quantity and price. That is why the site is there.  Try a few orders and see how you go. 

A tip I recommend is always buying from overseas suppliers with PayPal or  Alibaba. That way, you get a guarantee if something is not right, the fact is that you do not know them. 

I had one client that decided to buy mobile cases. He contacted a few overseas suppliers and decided on a few. Over time, he built up his purchases. He now sells a lot of mobile cases with decent margins.