With Vendors, It’s Never Just Business

Focus on personal relationships to build trust in your new manufacturing partner.

When dealing with vendors it’s never just business. As structured and in-personal some interactions may feel, there is always a person on the other side of the proverbial table. A human being. Someone who has expectations and fears and a range of thoughts about how the interaction will proceed.

Tending to that personal relationship is just as important as managing the business relationship.

Vendor or Partner?

When I first heard a company call their contract manufacturer a partner, it seemed silly. They have no direct financial stake in the company and are merely getting paid for a service. We ask for a thousand widgets and they show up six weeks later. There are terms, contracts, signatures, and payment. There is structure. Everyone knows their part. It all seemed so obvious.

Size Matters

It wasn’t until I worked for a much smaller company where the title of “partner” started to make sense. Before, everyone knew the rules. Employees at the larger companies spent years getting to the point of trust with that particular manufacturer. The process was already in place. I didn’t have to do anything to benefit from the existing relationship.

When I had to be the one help developed that process, things were less black and white. It was easy to take basic assumptions for granted. We didn’t immediately understand each other. There were arguments and miscommunication. Things felt much more emotional. Looking back, I think this came as such a surprise because I didn’t think about the people. Behind every e-mail, phone call, contract, signature, there is a person. With that person comes all the good/bad of human nature and diversity. There is an awkward stage with a new business relationship because there is typically an awkward stage when two (or more) people get to know each other.

Trust is the exception? Or the rule?

The main thing I want from a vendor is trust. I need to trust them and they need to trust me. Do they have the skills to produce my product? Are they truthful with their deadlines? Will they do the right thing when mistakes happen? Though some of the risk can be reduced by well written contacts and clear specifications, there will be things that end up between the lines. What happens when something happens that isn’t explicitly stated in the contract?

At the start, everything little things matter, because there is no history. No one has earned the benefit of the doubt yet. Does missing an e-mail mean they will miss a shipment date? Is that low price because they can’t keep consumers? At this stage a pessimistic person will think the sky is falling (until it isn’t). An optimistic person will think everything is fine (until dates slip).

Every due date met and bill paid is a little bit of trust gained in the relationship. Over time each party feels out the unstated rules and expectation, regardless of personal differences that might have prevented that previously.

Bad Actors

You will encounter people who will take advantage of the situation. Snake oil is as old as commerce. As a hardware creator, this is legitimate fear when searching for new suppliers.

The first shipment is a big test. Reduce the anxiety by creating smaller tests early on. Ask for drawings, samples, previous work, customer references, and other seemingly simple transfers of information. These are small tests to prove that communication lines are open and requests are met in a timely manner. Most importantly, do this before there is large sums of money at risk.

Vendors have risks as well. They don’t know if you are going to order the amount you promised, vanish after one P.O., or not pay in a timely manner. As the customer, build trust by clearly communicating your needs and laying out your expectations in advance.

Perception vs Reality

There is a misconception that oversea manufacturers are all out to get you.

They will steal your idea and money at the drop of the hat.

Yes, this has happened, possibly enough to be a stereotype. But it denies the billions of dollars in transactions that happen successfully.

In these discussions, the next breath is spent talking about how local manufacturing is the answer. That is an interesting scenario and is something we will talk about here in the future. While this does provided a higher level of confidence in the transaction, it is not solely because of the the supplier. The main thing you trust is your local legal system. If someone in your own country breaks a contract, it is much easier to take them to court. Both parties know that, so there is a better chance everyone plays by the rules. When enforcing a contract involves international justice systems, it makes it easier for bad actors take advantage of the situation with minimal repercussions.

These have been my experiences so far in working with external manufacturers. Each interaction is different and I’m sure many of you reading this have experienced a wide range of good and bad service. If you have any tip or tricks with dealing with new vendors, I would love to hear about it in the comments below.