Successful supplier management is all about establishing and maintaining mutually beneficial and collaborative relationships that deliver value beyond just maximising profits. However, it is imperative that both the pharmacy management team and the suppliers understand the value of partnership and want the relationship to be one that is reciprocal.
Farah Ali, general manager of the Warman-Freed Pharmacy, explains how this is important to her business. “We know that successful relationships with suppliers are paramount to effective small business management. While we have many excellent supplier relationships, a few issues that presented themselves in the last year made us realise we needed to review some of the companies we were working with to ensure we remained proactive in our approach.”
The retail team at Warman-Freed recently found themselves in a few challenging situations with suppliers. For example, one large non-healthcare supplier decided to pull out of the pharmacy, with little consideration for the impact it would have on the pharmacy’s business.
Another supplier terminated the contract with little consultation or consideration for the future and mutual potential the pharmacy could offer. Other suppliers took advantage of the change of management to try to re-negotiate the terms of the relationship.
The team also noticed a clear divide between suppliers: those who obviously wanted to work with Warman-Freed and who would proactively pursue listings and added value to the business, and those who were impossible to get hold of, seemed reluctant to take pharmacy orders or appeared to work solely to fulfil their own needs.
Ms Ali explains, “For a while we tried to meet these demands and negotiate with the suppliers to rethink their costs or sales figures. However, ultimately, we didn’t feel in control of our own business – specifically, we had concerns over lost sales and felt vulnerable”.
It was at this point with certain suppliers that the Warman-Freed team decided they needed to reclaim control of the conversation. Ms Ali explains, “We worked as a team to calculate the potential financial hit that we’d face if we walked away from particular suppliers and formulated a plan to use alternative products or services that could fill the void.”
By taking the decision to walk away from some challenging relationships, the team were then free to put their efforts into creating healthy partnerships with new suppliers and strengthening those with valuable vendors. It was also a chance for the pharmacy to look at other complementary options growing in popularity, which previously would have been out-of-bounds while old supplier contracts were still in place.
No supplier relationship is set in stone and there isn’t a one-size-fits-all approach to managing them. The five tips below share suggestions for navigating your way through the tricky pathway of supplier relationships.
The key factors are:
To download Warman-Freed’s supplier review template click here
Real-time learning from Warman-Freed Pharmacy, London