23. Supplier Relationships The Forgotten Profit Partner
A series about business efficiency, finding profit and how to get there
Introduction
Ask most SME owners how they manage their suppliers and the answer is often “We send the orders, they send the goods.”But that’s not a relationship - that’s a transaction.
In uncertain economies, where efficiency and resilience matter more than ever, suppliers shouldn’t just be vendors. They should be strategic partners - collaborators who help you cut costs, reduce lead times, improve quality and even innovate your offering.
The problem? Most businesses treat supplier management as an afterthought and leave real profit potential on the table.
When nurtured well, supplier relationships can become a powerful efficiency lever. Let’s stop overlooking them.
Actions to Be Taken
Here’s how to transform your supplier relationships into engines of efficiency and margin
Map Your Key Suppliers and Their Impact
List your suppliers by -
Annual spend
Criticality to operations
Risk level (e.g. single source, long lead time, overseas)
Reliability and responsiveness
This helps you prioritise where to focus relationship-building efforts.
Move From Price-Focused to Value-Focused Conversations
Price matters, but it’s only one part of the equation. A great supplier helps you -
Reduce inventory (by offering smaller, more frequent shipments)
Improve cashflow (through extended terms or smarter ordering)
Access new materials or innovation
Avoid stockouts or disruptions
Start asking “How can we both win here?”
Schedule Regular Check-Ins (Not Just Order Confirmations)
Build cadence. A short monthly or quarterly meeting can -
Solve small issues before they grow
Explore ways to improve workflow
Reinforce partnership
Discuss demand trends and forecasts
Your goal move from reactive to proactive.
Collaborate on Efficiency
Ask suppliers -
What can we do to make it easier to serve us?
Are there packaging, delivery, or batching efficiencies we’re missing?
Can we access better pricing if we order differently or forecast better?
You’d be surprised how many suppliers are willing to help, if asked.
Recognise and Reward Reliability
Suppliers are people too. When they go the extra mile, acknowledge it. Refer them. Pay on time. Give them early sight of your growth plans.
Strong partnerships are built on mutual respect, not just negotiation.
Psychological Perspective
Many SME owners are reluctant to engage deeply with suppliers. There’s often a mindset of -
“They’re bigger than us — they won’t care.”
“If I ask for more, they might raise prices.”
“I don’t want to rock the boat.”
But good suppliers want good customers. They value transparency, predictability and professionalism - especially in smaller businesses that are growing steadily.
By approaching suppliers as partners , not just providers - you move from a mindset of cost-cutting to one of value-building and that’s a mindset shift that creates long-term gain.
HR Best Practice
You might not think of supplier management as an HR issue - but it is.
Why?
Poor supply impacts staff workload and stress
Strong supplier relationships reduce firefighting and chaos
Buying and operations staff need training in communication, negotiation and empathy - not just spreadsheets
HR can support by -
Embedding supplier relationship management in relevant role descriptions
Coaching staff in assertive but respectful communication
Encouraging cross-departmental understanding of how supplier performance affects the whole business
Also celebrate supplier wins in team meetings. It builds shared accountability and respect.
Red Flags to Watch For and Mitigate Against
Your supplier relationships may be costing you margin if -
You don’t know your top 3 most critical suppliers by name
Orders are placed reactively, without visibility or forecasting
Delivery delays are frequent — and you just “work around it”
Pricing changes catch you by surprise
There’s no relationship beyond email and invoicing
Each of these is a sign of an underdeveloped relationship and untapped value.
Narrative Story Meet Jess from Whangārei
Jess runs a local giftware business that imports ethically sourced home décor. She used to treat her overseas supplier like a vendor - place an order, hope for the best.
But as delays increased post-COVID, she realised how vulnerable her business was.
She reached out. Set up monthly check-ins. Shared demand forecasts. Offered feedback on packaging damage and delays. In return, her supplier -
Prioritised her shipments
Offered a better deal on batch pricing
Flagged a new product line early — which became her bestseller
Jess’s reflection - “I stopped treating them like a factory and started treating them like partners. They responded in kind and it’s changed how I run the whole business.”
Golden Nugget
“Your suppliers can be cost centres - or competitive advantages. Treat them like partners and they’ll help you grow.”
Golden Nugget
“Stock on the shelf is cash out of reach - efficient inventory is about confidence, not accumulation.”
If you’d like a confidential, free of charge, free of obligation conversation about your business, here’s how to get me.
📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact
If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview
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