Make your vendor your partner

Corn Soybean Digest.jpg

Originally published in Corn + Soybean Digest

To build a competitive advantage, we often think of learning from other farmers through peer networks, but there is a ready resource that often goes underutilized—our suppliers. We typically think of them in a transactional way, but with the right relationship we can access more expertise, experience, and ideas than we ever have before.

It’s easy to get into an almost adversarial relationship with our vendors. We look at our expenses and see the suppliers as the problem. So we go into “beat ’em up” mode and start the race to the bottom. Shifting the focus from cutting cost to increasing profitability helps us to begin selecting and engaging suppliers in a very different way.

One of our clients shared how he has done this. He is passionate about mastering crop production but also wants a well-run farm business. As he worked to improve his operation, he quickly saw the need for expertise he didn’t currently have. He decided to begin putting his suppliers to work in a new way—as a board of directors or board of advisors.

At least twice a year the farmer invites a group of his trusted suppliers from all aspects of the farm (banking, insurance, marketing, fertilizer, and seed) to discuss the opportunities and threats that need to be considered. The meeting is designed to be open and casual and create dialogue that helps prepare for the future. It’s also a forum for banter and debate among suppliers who may not share the same opinions. This helps the farmer think about his business in a new way and see the performance of the people who are working to be key suppliers.

The suppliers that shine in this type of an environment certainly aren’t the ones that only have a volume discount to sell. The strongest ones demonstrate:

  • Passion to understand their client’s business goals and challenges.
  • Great expertise in their own field and an understanding of how that fits into the farm’s “system”.
  • Perspective of the future consequences of decisions a farmer will be making.

The forum includes long-term trusted suppliers and people who are working to earn the farm’s business. Expectations are laid out, including supplier roles as well as privacy of information. Consider a non-disclosure agreement. The goals and the business plan are shared, along with challenges that need to be addressed. After the meeting this farmer has a better understanding of the actions he needs to take and a clearer picture of which suppliers bring value.

Assignment: Pick a supplier that you have a good relationship with that you think could add more value. Prepare some of your goals and challenges and have a different kind of meeting. Pick their brain, learn from them. If the approach works for you, you can begin scaling up the size of your board of advisors.