Working with international suppliers

Working with overseas suppliers

Guide

A strong relationship with an overseas supplier can be beneficial to your business. It can give you a competitive edge in a new market. It can also help you to negotiate a more favourable price, better terms and conditions of service, and greater availability of product.

Here are some fair practices you can follow to strengthen your connection with your international suppliers.

1. Build trust gradually

Trust is a crucial element of any supplier relationship. Fostering trust can take time and effort, especially if there are language barriers between you and your overseas supplier. The key is to build trading relationships slowly.

2. Set clear expectations and terms of service

Don't leave things to chance when developing your working relationship. Draw up clear written contracts and openly set expectations of service and quality for both parties. Your initial contract with a new supplier may be on a project-by-project or shipment-by-shipment basis. As the relationship develops, you may move to longer contract periods and potentially negotiate better terms. See overseas supplier contracts.

3. Understand cultural and social differences

An important part of building a strong supplier relationship is learning how things work in the supplier's country. Keep important cultural and social differences, and local business etiquette in mind when dealing with the supplier. See entering overseas markets.

4. Communicate clearly and openly

Communication is a potential hurdle in dealing with overseas suppliers. Even simple actions such as routine telephone calls can be complicated by factors such as time differences, low-quality phone connections and language barriers. To determine if a language may be an obstacle, consider:

  • Which language will you use with your supplier?
  • Do you have enough foreign-language speakers in your workforce?
  • Do these employees have the skills they'll need to deal with your suppliers?
  • Would it help to use local interpreters, especially for key meetings, to avoid misunderstandings?

Face-to-face meetings are likely to be infrequent, but they can be vital to building the trust - so plan them carefully. Use video conferencing or other modern communication platforms to ensure that you keep in touch with the supplier.

5. Manage your supplier relationship

You should carefully monitor key aspects of the new supplier relationship. This will help to identify areas for possible improvement. Follow best practices in supplier quality management when managing your overseas supplier.

You should also schedule progress reviews with the supplier. If you identify any problems, decide together how to resolve them. If everything is working smoothly and profitably, you may want to extend the level of business you're doing together. Find out how to review your supplier's performance.

6. Pay your supplier on time

If you want a long-term, successful relationship with your overseas supplier, you should pay them promptly and reliably. Payments in cross-border transactions are often a cause of disagreement. Agree clear payment terms at the start of the relationship and let your supplier know if you foresee any difficulties with meeting your obligations. See more on paying overseas suppliers.