Commentary & Analysis
Suppliers and Business Partners - An Important Part of the Loyalty Equation
By Ed Marino of Presstek April 3,
By WhatTheyThink Staff
Published: April 3, 2006
By Ed Marino of Presstek April 3, 2006 -- As the third part of our Loyalty Trilogy, I wanted to discuss the importance of partners and suppliers in the loyalty equation. We have discussed both customer loyalty and employee loyalty, the two most common loyalty elements most companies think about. Loyalty in these environments is extremely critical to business success, of course. But so is loyalty in supplier and partner relationships. For most businesses, without reliable supplier and partner relationships, not only will employee and customer loyalty suffer, the entire business may be at risk. Our partners and suppliers are also our competitors, but that doesn't mean those relationships cannot be developed to the benefit of both parties, based on trust and respect. In my book, The Loyalty Payoff: How Building Customer Loyalty Boosts the Bottom Line, I talk about building loyalty in the supply chain in today's world of co-opetition. If that is a new term for you, I am sure the concept isn't! Many times, our partners and suppliers are also our competitors, but that doesn't mean those relationships cannot be developed to the benefit of both parties, based on trust and respect. In fact, those types of relationships are probably more the norm than ever before. Here are some examples I used in my book that I am sure you can relate to: That trade bindery shop you have been working with does terrific work, and they are extremely reliable. But they have recently decided to get into the printing business and have installed a high-end digital color press to capture printing revenue on some of that bindery work. The copy shop down the street that you have been sending short-run, quick-turn work to for years has just installed an offset press. Do you now see these one-time partners as a threat to the health of your business? If you terminate your relationship with them, what do you do about the complex bindery work or the quick-turn copying that your customers have been including in their working relationship with you? Of course, not all of your suppliers are equally important. Some are more integral to your business than others. Those that are more integral are often providing a specialized product or service that lets your people and your company focus on your core competencies and leverage their core competencies to meet your business objectives. Many times, but not always, suppliers who deliver a commodity product to your business are just that--commodity suppliers of easily obtainable materials or services. If you needed to change suppliers, it probably won't make a lot of difference to the overall picture within your supply chain. Sometimes even suppliers of commodity products can be developed into loyal business partners that are integral to your operations. But sometimes even suppliers of commodity products can be developed into loyal business partners that are integral to your operations. An example at Presstek is our relationship with DuPont. DuPont supplies us with a polyester base that is used in the manufacture of our chemistry-free printing plates. This polyester base is surely a commodity item. But in the case of our relationship with DuPont, we are a large buyer of their polyester material, and they are a trusted partner with whom we have shared a significant amount of what we consider to be proprietary intellectual property. Why? Because they are willing to work with us to continue to improve our products since our polyester needs are very different than those of many of their other buyers. They help us with strategic planning, and they provide us with technology and information that helps us build a better product--resulting in happier, more loyal customers. In turn, we share confidential information with them so that they are better positioned to help us. It is a commodity product, but it is a deep relationship based on trust, respect and loyalty. Building loyalty with suppliers and partners requires a top-down effort and an investment of time and resources on the part of both parties. Just as with customers and employees, building loyalty with suppliers and partners requires a top-down effort and an investment of time and resources on the part of both parties. Building these relationships into long-term, valuable and loyal relationships can pay big dividends, for you and for them. But as we discussed with customers, it is important to analyze the value of each of your supplier relationships to your business and carefully select those in whom it makes sense to invest time and resources--both very limited commodities in today's hectic world. An important element of that assessment is to determine whether that potential partner itself manifests a culture of loyalty. When possible, visit one or more of their sites and speak to employees as you tour facilities. Ask for customer and business partner references, and check them out. You will quickly be able to assess how they rate in the loyalty equation, and you should take that assessment into consideration as you think about the level of resources to invest in the relationship. Your goal should be to build sustainable and mutually beneficial long-term relationships with critical suppliers. Your goal should be to build sustainable and mutually beneficial long-term relationships with critical suppliers. But you should also keep in mind that even though you may be in what could be categorized as a strategic alliance, it is still a business deal and should be documented as such with contracts and service level agreements that make the responsibilities of each party crystal clear. Successful, sustainable and loyal supplier and partner relationships will free you to focus on what you do best--your core competencies--rather than constantly worrying about whether that supplier will meet your expectations or searching for replacement suppliers when they do not. The result will be an enhancement to your own loyalty environment--happier employees, and happier, more profitable customers.