Developing Relationships with Vendors
Dick Merron remembers all the boxes—boxes upon boxes upon boxes, stacked up in the parts room at his fledging shop, Iowa Auto Rebuilders in Waterloo.
This was 16 years ago, but Merron can still picture those boxes.
“Our parts management was a mess,” he says now. “We had all these parts that we weren’t using. We had parts we were still waiting on for in-process jobs. We didn’t know what was coming in or when.”
Merron laughs at the memory today, only because he can; he’s made sure it remained a distant memory. His shop struggled to pull in $75,000 in sales per month when he opened it in 1998; today it does more than $275,000. He’s added processes, systems and procedures that have tightened up every aspect of the business.
But, as he looks at his parts department today—now a lean-focused, organized and efficient operation—he says there’s one thing that turned it around: communication.
“That was the problem, a lack of communication with our vendors,” he says. “They’re a customer, a very important customer that impacts every aspect of our operations, and we need to treat them like it. We have to build a relationship with them based on trust and communication.”
Merron came up with a simple plan: He hosts each of his “key” vendors in his shop once a year as a relationship-building strategy, focused on many of the customer service techniques many would associate to dealing with vehicle owners.
“It’s all about building trust,” he says.
Brandon Gary, owner of Champion’s Collision in Houston, follows a similar plan. Both shop owners say this strategy is crucial to developing those relationships—and they are more simple and less time consuming than many would think.
All About Loyalty
Champion’s Collision works with roughly 300 total vendors, 50 of them that Gary says are “key, day-in, day-out” vendors. And working on 300 vehicles per month at $1,800 per ticket, his shop relies heavily on its vendors.
—Brandon Gary, owner, Champion’s Collision
“That relationship [with vendors] is going to make your business who and what you are, and what you’re going to be,” he says. “It’s one of the pieces of the puzzle you have to have.”
Since opening his shop more than 20 years ago, Gary has put a priority on that relationship. Nearly all of his core vendors have worked with Champion’s for 10-plus years, many in the 15-year range.
The longer the relationship, the better the working dynamic will be, he says.
“Everything is about loyalty, and that’s both sides of the spectrum; from us to them and them to us,” he says. “We understand each other’s needs, we trust each other, and that makes us better business partners. We operate to help one another.
“You have to find a way to build that loyalty.”
Meet in the Middle … at Your Shop
Customer service, when it pertains to vehicle owners, is difficult due to its limitations, Merron says. You have limited touch points.
With your vendors, you have more opportunity to create parameters within which your relationship can develop. You can take the time to actually sit down and establish that connection.
And you have to do it.
“That’s, hands down, the most important thing we do, hosting those annual meetings,” Merron says. “They get to see what we’re all about, and we get to show them. They understand what we’re dealing with and we can show them the role they play.”
A successful meeting, Merron says, will leave both sides feeling like true partners, fully understanding the customer-to-customer relationship that drives both businesses. There are some specific details of how the meetings are set up, though, that will determine the success of the strategy.
The Location. Merron and Gary will occasionally visit their vendors, or even meet with them at various locations—restaurants, trade shows, etc. But every year, Merron says, it is important to have your vendors inside your shop.
“The entire goal of this meeting is to build trust and build that relationship, and bringing them to your shop, letting them get that inside view really helps to do that,” he says. “You get to show them firsthand what makes you stand out, and you get to show them exactly what your needs are and why. They can see why you might need this many parts at this time or why you handle your inventory in a certain way.”
The Frequency. Merron holds his meetings with each of his key vendors (roughly 10 in all) each January. Gary holds meetings every 12–18 months, depending on the vendor and their schedules.
“These are the people that you work with day in and day out,” Gary says. “But you need to be able to go over everything that makes up that relationship. We meet with them every 12 to 18 months, but it’s just about making sure everything is on the same page every year.”
The Participants. With each of your vendors, Merron says, you need to have a set chain of communication. And everyone involved in that parts-ordering process should be a part of the meeting, he says.
From his own staff, Merron likes to have his parts manager, office manager, and vice president (general manager) present at the meeting. And he prefers to have a manager or owner from the vendor, as well as the main person his shop staff deal with during the ordering process, and the delivery person.
“Everyone who’s involved with the regular day-to-day process—or when things might go wrong—needs to be there to go over everything,” he says. “Then, there’s not going to be anyone left in the dark.”
The Focus. The overall goal is to demonstrate the needs of your shop and explain to the vendor how your working relationship with them affects every aspect of your business, Gary says. That being said, Merron has a specific set of items he goes over with the vendor in each of these meetings.
1. Numbers. Merron prints off the invoices and repair orders that involved that vendor. He asks the vendor to do the same, and bring the documents to the meeting. They then do a quick comparison of the documents and make sure their numbers match. “We judge our business relationships by statistics,” Merron says. “We have to make sure we’re looking at the same statistics.” One important number to look at is the percentage of products that needed to be returned to the vendor. A number that’s “getting out of hand” can be a red flag for how that relationship is working, Merron says.
2. Communication Line. That chain of communication mentioned earlier needs to be firmly established in this meeting. How does the vendor prefer orders and what’s easiest for your shop—online, fax, phone, etc.? Whom does your shop call if there is an emergency part needed? Whom do you call if there’s a problem, or a return needed? Who is the manager in place to handle larger issues? This meeting is a good chance to make sure everyone involved can be introduced and discuss face to face how best to handle situations. “We prefer to have one or two key people at each vendor that we know we can deal with,” Gary says. “Having that familiarity makes tough situations easier.”
3. Partnership Specifics. This meeting presents a good opportunity to iron out all the specifics of your partnership with that vendor. Discounts, time of delivery, delivery methods, return policies—both parties need to fully understand what policies are in place.
4. Shop Tour. Give the vendor representatives a full tour of the shop, demonstrating the entire repair process and workflow. Show them how your staff goes about their day, explain employee roles and positions, and make sure they understand all systems and processes in which vendors are involved (parts/paint procurement, storage, use, etc.).
A Better Relationship
Merron credits his annual meetings—which he has done for the last 14 years—for his many long-standing relationships with his vendors. It’s also helped to add a very high level of consistency with his shop’s parts ordering, which, in turn, has helped his shop on its path toward lean operations and improved profitability.
For Gary, he says the benefits are simple and obvious.
“Having that strong, solid base for communication is so important,” he says. “They’ll know what you’re all about, they’ll know that you’re honest. They know that if you’re saying there’s an emergency, you’re not just crying wolf. You’re putting yourselves in a position where you’re real partners, helping each other make your businesses better.”