Bad Suppliers Hurt Business Growth

Are bad suppliers hurting your business growth?

During the last few months of 2019 I was kept busy assisting clients with their quarterly and annual reviews. Listening to them as they reflected upon their performance and discussed pressure points, I was reminded that no business acts in isolation. There is always a chain, you rely on your suppliers to provide you with a service/product, so that in turn you can provide your customers with a service/product. And just like a chain, if there is a weakness in the strength of the chain, it will break and you will have to spend precious time and money fixing it. That’s why bad suppliers hurt business growth.

The reason why I was reminded about chains and the consequences of weak links was because several of my clients mentioned that they had increasingly been experiencing poor customer service from their suppliers, which in turn was affecting their ability to deliver a premium service to their own customers.

Other business managers I spoke to also report a trend of increasingly difficult relationships with suppliers in 2019. Some of the reasons given as to why this was happening are outlined below.

Why bad suppliers hurt business growth

Here are some examples of deteriorating supplier relationships and services. Have you experienced any of these?

  • The supplier had tried to be too many things to too many people – instead of focusing on a core service, they had stretched resources to try and cover many bases.
  • Suppliers had over-promised and under-delivered on their ability to complete contracts.
  • Making money had been too easy for too long and complacency had crept into the supplier’s culture.
  • The tight labour market had resulted in a lack of good people working for them, affecting their ability to deliver a good service.
  • Their internal systems were letting them down and complaints were being ignored.

Now a supplier might only be having one of these problems or they may be experiencing all of them, but ultimately, the reason why they are having them at all comes down to people. Those people may be the managers of the company who are performing poorly when it comes to planning, management and communication, or it might be the general staff who are not skilled enough or are unhappy in their work and are disengaged and ‘slacking off’.

Like all businesses, if you do not have grade A players in the right position or have staff who do not fit in with the company culture and work ethic, the company will struggle to thrive. It is clear that bad suppliers hurt business growth, especially when your company is dependent upon providing a good service/product to other businesses.

Why good service from suppliers matters

Poor customer service from suppliers can have a negative effect on your business growth and revenue due to:

  • You and your staff being pulled away from tasks to deal with supplier issues.
  • An increase in levels of frustration due to delays and dealing with difficult people.
  • Impacts on your own business culture as negativity around the ability to fulfil orders takes hold.
  • Lost productivity due to delays and defects in supply which costs your company money to fix.

Ignoring the problem of poor service from your suppliers in the hope that it will get better is not a good business decision and you basically have three options to choose from in order to solve/mitigate the problem or even stop it from happening in the first place. These three options are: change your supplier; help change how they work, or adapt your product/service so they are no longer part of the supply chain.

Stay, Adapt or Change

Poor customer service can result in lost sales, higher costs, people drama, poor company culture and diminishing net profits. So it is well worth investing your time into looking for a new supplier. If you do not have the luxury of multiple suppliers to choose from, then talk to your existing supplier about the problems you have experienced with them and suggest that they need to make some changes if they are to continue doing business with you. If they are unwilling to do so or cannot change, then look at adapting your product/service so that you do not have to deal with them anymore. Remember putting up with poor customer service is not great for your company, so any investment you make to receive good service is a sound one.

If you choose to break free from your existing supplier then consider the following when choosing a new supplier:

  • Do their values and company culture match yours?
  • Do they have systems and processes in place to deal with the unexpected and a long term strategy that is sustainable?
  • Meet with their management team. Ask yourself if they are people you would want working for you i.e. are they A grade people too?
  • Can they deliver what they say they can and have measurable targets?

Are you a supplier?

Then my advice to you is to talk to your customers regularly about the service they receive from you and work quickly and proactively to address any issues that they bring up. You cannot afford to let your company develop a reputation for poor customer service. I can help your business get back on track and gain an A grade rating, so give me a call and we can discuss what steps you need to take today.

  • About the Author, Leigh Paulden

    Leigh Paulden is the only Senior Certified GI Business Consultant in New Zealand. He works with mid-market business leaders looking to grow. He creates the clarity and certainty needed to make great decisions and achieve scalable and sustainable success.

    Find out more about Leigh or contact him to discuss taking your business growth to the next level.