The requirements of a preferred supplier has not really changed but there are lot of add-ons . Factors like compliance , development , delivery on time , price and quality have now become entry point norms . So , what ’ s next …? A ‘ preferred supplier ’ cannot exist without a ‘ preferred customer ’. They have to have a balance with each other . You cannot be in isolation , since suppliers are now on a level playing field where they can say I have a good factory , I have a good understanding of business , I give you good price , I give you delivery on time , compliance ; it is actually a ‘ marriage ’ between a preferred supplier and preferred customer . A preferred customer is one who has an understanding with a preferred supplier … This is what I need from you and these are my goals . Those goals may vary from brand to brand . These days you cannot have a preferred supplier who is waiting . You can only give these things to somebody , provided that somebody has the need to take these from you . ‘ Me ’ as a ‘ preferred supplier ’ can exist only if someone values me and somebody can value me if he has those things to give it to me .
The definition of a ‘ preferred supplier ’ will change from customer to customer
For Zara , preferred supplier means somebody who can give design and if the brand makes last minute changes , he can adopt those changes quickly and make sure that the brand still gets product on time and also alerts the brand when things are not going right . Somebody like Gap has a different perception about preferred supplier . They need units , capacity , price , delivery , quality and ensure you
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are offering all this as a package to me at same point of time . For Walmart , the definition of preferred supplier changes – I just need price . So , in short , a preferred supplier can exist only if you have a preferred customer . They go together and those needs can change .
My main market is the USA and my customers are looking for high-fashion ladies wear and kidswear , but are very pricesensitive , so the ability to give the right ‘ price ’ is very important . There are suppliers in Chennai , who can give me quality , delivery on time but can ’ t give me good price and so are of no use to me . But I know they are great vendors . But he doesn ’ t match my needs . My goals and deliverables do not allow me to work with me . Then another supplier in Bangalore may be able to give me price but still may not be a ‘ preferred supplier ’ as he may not deliver on time .
A great vendor may not necessarily be a ‘ preferred supplier ’
However , there are some preferred suppliers because they understand , and that is where relationships are built – long term relationships . Customers also need such vendors who can understand business , who can deliver on time , give quality , give the designs , be flexible , give price and are nimble and quick to work .
It is easier said than done . I hear many buyers say vendors are not responsive and they do not understand , but this is a wrong statement . Customers have to understand how suppliers think … Where do you see the business in 10 years , and is it worth investing in ..., is a question that haunts the manufacturers . The country has seen a fall in GDP growth from
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7.1 % to 6.1 %… In GVA ( Gross Value Added ) terms we are actually 3 %. It ’ s a huge dip and has affected sentiments . Only , if I see a growth in business , then I would like to invest . If there is a struggle and if we are fighting a daily battle , your head is not clear enough to say where I need to go . But , people are still growing …, things are happening but they are not happening to the scale at which it was happening 10 to 15 years ago .
The reality is that business is saturated . There is no influx of extra business coming . Input cost is going up , wages are on the high , so salaries are also increasing , and cost of doing business is going up . Notably , input cost is going up and FOB price is going down . One mistake and everything gets wiped out anywhere , so it is very challenging . So just to make a sweeping statement that
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A ‘ preferred customer ’ is one who has an understanding with a ‘ preferred supplier ’… This is what I need from you and these are my goals . The goals may vary from brand to brand .
vendors are unresponsive is incorrect . Understand the business has nothing to do with growth . Understanding the business means there are flexibilities which the businesses need .
Buyers have to also understand that there is a certain pipeline that exists , certain deliverables need to happen and we need to be mindful of what is happening in their lives too . Having said that , challenges are there , business is very soft . But customer too needs to understand the challenges of vendor – That is what a preferred customer is . It ’ s a collaborative effort . You need to understand ‘ me ’ and I need to understand ‘ you ’ and that ’ s how partnerships can be built .
‘ Business can exist only if you understand each other ’ s needs and that ’ s always been the sourcing hallmark ’.
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