Small firms believe supplier relationships key in recession
More than 90% of small firms believe that good relationships with suppliers will be critical during the economic downturn, according to HSBC Commercial Banking.
HSBC’s Value of Relationships report also found that 31% of small businesses think their suppliers could save them money if they keep them on their side, while 37% said they could save them time.
“If you’ve got good relationships with your suppliers they will be quite flexible, and they will often put in extra hours to help you,” said HSBC spokeswoman, Anna Murray. “They will know your business to the extent that they can quickly come up with solutions for you, and they might also consider giving you more flexible payment terms.
“If firms approach their suppliers and let them know when they are struggling, instead of panicking and looking for cheaper alternatives, they can get better value from their current supplier,” added Murray.
Chartered Institute of Purchasing and Supply (CIPS) senior procurement specialist, Mike Brookes, warned that small firms should not see themselves in isolation from their suppliers, but as part of a chain of mutually dependent businesses.
“It is in everybody’s best interest to ensure that their supply chain is going to stay intact by working closely together,” said Brookes. “It is really important for firms to share information as honestly as they can.
“Suppliers are currently finding it difficult to get credit insurance against firms that don’t pay them, so the more information a firm can give its supplier to reassure it, the better,” he added. “Due to the lack of credit insurance, a supplier might ask the buying organisation for money up front, but if the two businesses are working well together they probably won’t feel the need to do so, so it can save money for the small firm.”