In International business, managing suppliers is fundamental to maintaining a smooth operation. However, when things don’t go as planned, addressing the situation with a clear strategy is essential.
Case study
Recently, a businessman encountered a significant challenge with a supplier. The initial agreement set a lead time of 15 days for the product to be ready. Notwithstanding, 25 days passed, and no unit was properly made. After consistent follow-ups, the supplier finally produced the first unit, but it came with two or three major defects. While the supplier agreed to fix these issues, they requested more time, and math was adding to the already delayed timeline.
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This is very nuanced and the experience led the party to reflect on a few important lessons to be borrowed that are important for anyone dealing with international suppliers:
Clarity of purpose; This businessman had already paid 30% in advance, which gave the supplier some leverage. Payment terms should always include protective clauses in case of delays or quality issues. Consider withholding a portion of the payment until the product is fully completed and meets your quality standards.Communicate..communicate.. communicate; This party conducted all his communication through the platform, allowing him to maintain a clear record of discussions. Platforms with built-in buyer protections can offer valuable security, so it's important to fully utilize them. The good practice of documenting everything ensures you have strong evidence to support your claims in case of any disputes.
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Taking the next step forward; The thesis here is how crucial it is to know who you are dealing with. In this case, They communicated with a manager, not the owner. Sometimes this can cause delays in decision-making. If possible, aim to build relationships with decision-makers within the supplier’s organization for quicker resolutions as the proof of pudding lies in eating.
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This party didn’t have a strict clause for delays or quality issues, which allowed the supplier to stretch the timeline. In hindsight, it’s vital to include a clause in the purchase order (hedging) that holds the supplier accountable for delays and quality defects. This is somber & punishing as it could involve penalties or compensation for each day past the agreed deadline throwing your calculations haywire.
Net net: You have to do a good job
The search for your trusted partner for any business is front and centre, as navigating supplier delays requires strong communication, clear agreements, and accountability. Whether you have time on your side or are working against a deadline.
Forward-looking approach; Make sure you are aligned and well-protected legally and financially. The next time you face a delay or quality issue, as long as your thinking is in the right direction it will be a done deal and, you’ll be better prepared to handle it professionally, legally, and efficiently. That is a perfect note to end this topic as we are in a business ultimately.
CREDITS: Lokesh Parashar| Cross Border Business Strategist