I love short business books. There’s something rewarding about tearing through a good business book in a week and learning something or being inspired.
I felt that rewarding feeling recently when I received as a gift the book “Treat Your Customers” by Bob Migliani – a book about service lessons a Fortune 500 executive learned while working at his family’s Dairy Queen store. While I expected to enjoy the book’s tips on service, I didn’t expect to read purchasing advice aimed at small business owners.
In this post and future parts of this series, I will share some purchasing-related excerpts. And I encourage you to keep an eye out for the book – I think my wife saw it at the Dollar Tree – so that you can enjoy the other inspirational business lessons.
In Chapter 22, the author recounts a time when he first became responsible for purchasing, inventory management, and payment. He recalls an incident where he “must have put [a certain supplier’s] invoices in a folder and simply forgotten about them.” The result was a deterioration in supplier performance: being put on hold for a long time, late deliveries, and curt treatment from a customer service representative.
It didn’t occur to the author that the root cause of this service decline was his failure to pay the supplier on time. That is, it didn’t occur to him until he received a “very firm collection notice.”
Having never experienced this type of supplier treatment, the author discussed the matter with another supplier. According to that supplier, “the relationship between companies and their suppliers was about respect.” The supplier went on to say that companies that fail to pay on time, get a bad reputation in the supplier community and that suppliers “react by not giving them good customer service or a fast response to their orders if the company didn’t have enough respect to pay the supplier on time.”
This incident helped the author learn an important lesson that he passes along to business owners: “A good relationship between you and your suppliers is invaluable for your business in terms of better customer service, more favorable finance terms, or just plain faster deliveries. For obvious reasons, a customer who pays on time is valued. And a valued customer can demand many favorable terms – which include not paying during the tough times.
“Since that incident, we’ve never neglected to pay our bills on time and have benefited greatly in terms of better discounts and faster and more frequent delivery times. Always pay your bills on time. It’s the fair thing to do and can lead to enormous rewards for your business in the long run.”
You probably work for a company much larger than an independently owned Dairy Queen shop and you probably know that on-time payment is important. But have you followed through to make sure that on-time payment happens for your suppliers?
When it comes to helping your company, it never hurts to have a gentle reminder.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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