Take 3 Actions Now to Manage Vendor Relationships

What we’ve learned about vendor management from COVID-19

Before this pandemic, you might have had a task on your to-do list like Vendor Due Diligence or Supply Chain Risk Management because it’s a good idea to check regularly on the strength, stability and security of businesses you rely on. But I bet it wasn’t at the top of the list. For most business leaders, your relationships with suppliers – whether they provide products or ingredients or services – are transactional, maybe friendly, and likely not something you worried about too much. You probably made agreements with them, negotiated prices periodically, and paid when they billed you.

And, if you’re like many businesses, the current disruption in the global economy has affected those relationships in ways you would not have imagined.

Whether you’re concerned about your ability to pay your vendors, or worried about the capacity of suppliers to deliver product, your vendor relationships should be top of mind right now. Whatever your concerns, the best next step is the same: communicate.

Consider these three actions now.

1. Got key vendors? If they’re not okay, you need to know.

Take some time to review every vendor you pay regularly. Who is key to your business continuity? Prioritize these mission-critical suppliers. If you make products, where do you get your parts or your packaging? If you’re in the food service business, will you be able to source meat or produce to reopen soon? Even if your business is currently on pause and you’re not sure about your future, reach out to these key people. Are they okay? How are their families? What are their business continuity plans? If they can’t provide what you will need, you need to know now.

2. Struggling to pay vendors? Don’t hide from them.

Your vendors are important to you – and you are important to them. They may be suffering as much as you are; empathy goes a long way. Be proactive. Look at your cash flow projections and bring your financial team together to work through what you can do now, and when you could do more. Come up with a plan for each vendor, and then reach out. Are they okay? How are their employees doing? What are their prospects? Be understanding. Tell them what you think you’ll be able to do and when. An agreement to get the relationship back on track in the future has mutual benefit.

3. Who’s got your data? Make sure it’s secure.

Cybercrime is up, way up. Where does your data live – who hosts your network? Increased remote work and using personal devices to access company data could introduce new risks to your system. Even if you have great internal controls and your employees are vigilant about every key stroke, you need to check on outside security. Talk to these vendors. How safe is their system? Have they seen an increase in attempted cyber-attacks? What are they doing to shore up security for you? This useful tip sheet suggests some areas you should ask vendors about.

One thing we’ve learned during this pandemic is that communication between people lies at the core of business solutions. Mutual respect and mutual purpose help move us toward recovery and resiliency together.