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How to avoid disputes with suppliers

On Behalf of | Jul 1, 2023 | Business & Commercial Law |

Suppliers ensure businesses have needed goods or materials to run. You should find the right party to attain smooth operations. However, despite working with a dependable supplier, issues can arise in the future. Therefore, it may be best to have a structure that promotes good business-supplier relationships.

Below are three tips for avoiding disputes with suppliers.

Have clear contracts

The agreements your suppliers sign should be clear. They should include clauses relating to goods/materials (type, quantity and quality), pricing, duration of supplies, payment, exclusivity and conflict resolution strategies. Vague contracts can lead to misunderstandings.

Communicate effectively

You should communicate with your suppliers about matters in depth. In addition to working based on the contract they signed, a supplier should be informed about a change/update on time. For instance, if you want more products on a particular day, let them know sooner. Changing an order time before delivery may be unfair.

Further, it may be best to have a central work management system where suppliers can see every detail of a deal. The system will ensure everyone is on the same page and suppliers can raise issues earlier.

Excellent communication can save you from misunderstandings and delays (the leading causes of disputes between businesses and suppliers).

Measure performance 

This tip can help  reduce supplier disputes, as you can quickly identify and solve problems. With key performance indicators, such as purchase order (PO) cycle time, PO and invoice accuracy, supplier defect rate, vendor availability and rate of emergency purchases, you should track the efficiency of your supply chain and make necessary changes.

These tips can help you avoid disputes with your suppliers. However, if you conflict with them, it may help to get legal guidance to protect your business.