Stronger supplier relationships help Australian importers gain a competitive edge, with a range of benefits, including favourable prices, generous terms and improved availability of product.
Fast growing currency transfer group, World First has published the following tips for Australian importers to form a stronger connection with their supply chains.
- Having a trustworthy relationship
It is essential to foster trust between the importer and the supplier, for a long term and mutually beneficial relationship, which can be challenging if there is a language barrier.
We would recommend building relationships in another market through a local specialist, or at least a linguist who speaks the same language. We have our recently-launched Asian desk, that provides expert currency advice in Chinese, helps us understand the influence of culture in business decision-making.
Trust depends on the actions of the importer, such as talking regularly and honestly with overseas suppliers, setting up standardised ordering processes that both parties can easily understand and follow, and returning defective goods promptly.
- Pay on time
Paying on time is critical to the sustainability of any profitable business relationship, but particularly for cross-border transactions. Overseas suppliers often have concerns about if and when they are going to be paid. Their cashflow relies on steady and dependable payments from customers.
Prompt payments allow them to pay their own suppliers for components needed for production, and defaulting on a payment to their suppliers could lead to a halt in operations.
Agreed payment terms should be confirmed at the contract formation stage. If you foresee that you might have problems meeting your obligations, try to renegotiate terms or agree some form of alternative remedy. Being open and honest about payment terms allows the supplier to plan more effectively and helps build trust.
- Communication is the key
Communicate frequently, openly and directly with your suppliers. It never hurts to meet your supplier face-to-face before you start working together. Getting to know the people who will be fulfilling your order helps build rapport.
Don’t rely on email alone to communicate with your supplier as this may lead to unnecessary back-and-forth correspondence to clarify points. Phoning or video conferencing your supplier contact lets you address any translation or technical challenges in real time. If possible use an app or platform for communication that’s popular in your supplier’s country. There are ample mobile messaging apps available for voice calls, video calls, text chat or combinations of these.
- Setting reasonable expectations
No one likes to be let down. In order to develop effective and strategic partnerships’ it is critical to set, maintain and review both parties’ expectations and how these align to your overall business objectives.
Be aware of what your chosen supplier is actually capable of producing and set your expectations on that basis. Another essential consideration is that stricter product quality standards, coupled with a relatively small order size, can deter a supplier from working with you. You need to weigh the value of your purchase order and the relationship you have with your supplier against your quality standards.
- Use a specialist currency transfer company
To maximise profits in cross-border trade, you need a strategy for fast and low-cost currency transfers, backed up by 24/7 service from a currency specialist who understands your business objectives, industry dynamics and foreign exchange exposure.
- Don’t put all your eggs in one basket
All importers, and especially SMEs, should not rely on one supplier. In order to mitigate the risk of business disruption through poor supplier performance, having back-up suppliers for key services or products help to avoid crisis situations.
Andrew Porter, Managing Director – Australia, World First
