Good advice for a fruitful partnership with your suppliers

Focus on flexibility and readiness for change in client-supplier relations has increased greatly. This imposes high demands not only on the contracts, but also on the contracting parties. The fact is that it is difficult to include the desired flexibility in conventional contracts, and that this often results in a strategic misfit due to the parties’ different expectations for the cooperation. In this article, focus will be on how to take precautions against this from a facility management perspective.

Conventional contracts are often rigid and focus on control, self-interest and value-sharing once the contracts have been terminated, whereas strategic contracts are flexible and focus on common value creation, strategic fit and cooperation.

But how do you secure a strategic fit and thus a good partnership? We hereby give you five pieces of good advice on this.

1. Choose your supplier with both your brain and heart

Not all client-supplier relations require a strategic fit. When you only need the supplier to provide a one-time service, the best thing would be to request two-three offers and, subsequently, choose the supplier offering the lowest price.

It is, however, important not to use the same selection method when intending to establish a long-term cooperation that also involves quite another cost level during the contract period. The lowest price is not always the same as the best cooperative partner or – for that matter – the best quality. In long-term cooperative relationships, quality should play a major role when selecting your supplier, but the chemistry between the parties should also be a decisive factor for establishing a cooperation with a particular supplier.

A cooperative partner can be selected by screening the market – for example via a tender process where suppliers are invited to submit offers on the basis of material prepared by you. After having received the various offers, you should arrange one-two negotiation rounds giving you a possibility of assessing the suppliers with the most attractive offers.

The negotiation rounds will make it possible to find the cooperative partner with the financially most advantageous offer and to examine with which supplier you have the best chemistry.

2. Align the basis for cooperation

A successful partnership requires a good basis for cooperation, and, therefore, it is important for the partners to balance expectations before beginning your cooperation. The balancing of expectations should be made at a kick-off meeting before the contract officially becomes effective.

At the meeting, it is important to consider the contract, the services agreed upon and the KPIs established to ensure that both parties have the same understanding of, for example, the meaning of the term ‘quality’. Thus, all parties will have the same understanding of the contract and of the services to be delivered.

Alignment of expectations could also prevent conflicts since you have together secured a common understanding of the contract. This common understanding of the contract will help minimise any interpretational issues during the cooperation.

3. Use the contract as a live strategic instrument

No matter how good the chemistry and no matter how well aligned expectations, there is no getting around the drafting of a contract regulating your cooperation. In this connection, it would be advantageous to do away with the idea that a contract is merely a purely legal document to be saved in a folder and to be consulted in case of a dispute. Rather, you should consider the contract a live strategic instrument.

Only few contracts are neither adjusted nor amended during a cooperation. Adding proactive provisions to a contract from the modest beginnings will make it easier to renegotiate them. Proactive provisions are, for example, the number of square-metres, the number of people eating in the canteen, reporting issues and the like.

Making these provisions proactive will make it easier to up- or down-scale, for example, the number of square-metres or the number of people eating in your canteen.

Incorporating proactive clauses into the contract and considering the contract a live strategic instrument will, thus, mean that you don’t have to spend much time (or too much money!) renegotiating the terms and conditions when flexibility is important.

4. Change your focus from ‘I’ to ‘we’

Human beings are – by nature – opportunistic and will therefore in general act according to their own interests and focus on maximising their own benefits. No matter how good the chemistry in your partnership, both parties will always be somewhat opportunistic and have a desire to maximise their own benefits.

However, in partnerships, it is important to shift focus from a rights-based approach (I) to an interest-based approach (we). Thus, it is important to ensure that both of you create and get value from the cooperation. Consequently, you can both benefit from focusing on the success of the partnership – for example how to ensure compliance with the contract in the most proactive way.

Moving your focus to the interest-based approach will also give the supplier a greater chance of getting a closer relationship with your business. The closer relationship also helps ensure that you get the desired quality – for example, that the cleaning staff feel as part of your business and, thus, also assume greater responsibility for the task – which is felt by your employees.

5. Communicate, communicate, and communicate again

Is the phrase ‘To speak one’s mind’ to be your mantra?

Apart from choosing your supplier with heart and mind, one of the most important pieces of advice is probably to communicate in partnerships. It is important that you don’t just communicate in connection with follow-up, stand-up or status meetings, but that you have a continuous dialogue. This will ensure that any disagreements – for example in the form of dissatisfaction with a delivery – are nipped in the bud rather than when the disagreements have escalated.