Suppliers secretly rank their customers, and where you land on that list determines your pricing, quality, and service. Omar breaks down the five criteria suppliers use: predictable volume, payment reliability, operational ease, growth potential, and relationship history. A $3 million DTC brand cut costs by fixing payment timing and order consistency instead of switching vendors.
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Foreign. Hey, everyone, it's Omar again. Welcome to Supply Chain Moves. If this is your first time listening, you picked a solid episode to start with. But before we jump in, a quick piece of good news. I was here last episode. I'm the growth partner here at Move and I'm going to be officially joining the show as a co host alongside Lara. But this is going to be my second episode for Supply Chain Moves. So I've been working with the MOVE team behind the scenes for a while now with a little bit of supply strategy and negotiations, real world execution with DTC brands, client acquisition, and yep, if you ever booked a discovery call, you've definitely seen me and that's a good chance that you've spoken to me as well. Now I'm going to be here regularly breaking down supply chain topics in a way that's actually usable and not just textbook. This topic right now is a really, really good one. Just because we're the start of a new year. And yeah, because this one quietly costs brands quite a lot of money and stress. So that's something that we definitely want to tackle. So today we're going to be talking about something most founders don't even realize exists. So your supplier has ranked you, you're not on a list, and where you sit on that list affects everything. So let's get into it. Most founders believe this, that I'm the customer, I'm paying. That means I have leverage. Definitely totally logical. And also not how suppliers work in real life. Suppliers don't prioritize based on who pays. They prioritize based on who is predictable, easy to work with, and low risk. And here's the uncomfortable truth. Most brands are not their supplier's favorite customer. Not because they're small, not because suppliers are evil, but because suppliers are reacting to how the brand behaves. And the crazy part is you'll never see this ranking. No email, no dashboard, no warning. You will only feel it through symptoms. Let me make it simple. Every supplier, factory, vendor, manufacturer, they mentally categorize their customers, not from formally, but operationally. When capacity is tight, when raw materials are delayed, when something goes wrong, they ask one question, who do we prioritize? And that answer usually comes down to five things. So number one, volume. Consistency. This really surprises people. Just because suppliers don't love big but chaotic orders, they love predictable volume. A brand ordering, let's say thousand units every quarter beats a brand ordering 20,000 ones, then disappearing for six months. Consistency means easier planning, easier purchasing, fewer surprises. In supplier language, that means low risk. So Number two, payment reliability. This one is massive and I think super underappreciated. Suppliers usually track how often you pay late, how late you are and how many reminders it takes to to get paid. Even being just a few days late repeatedly creates a flag. And once accounting flags you op starts treating you differently. And this is definitely going to be impacting a couple of things, one of them being your production slot, your priority during delays, how flexible they'll be when you need a favor later, and then of course with that, those, those are just a couple of things that you need to keep at the back of your head if you're currently going through that. So number three, operational ease. This is where a lot of brands lose points fast. Operational ease means specs don't change, mid production decisions get made quickly and let's say emails don't drag for weeks and that's quite common and something that we need to have a look at. And then there is, and then another one would be there isn't rework because something was unclear. If your orders create confusion, last minute changes or repeated back and forth, you are expensive to serve. And suppliers remember who's expensive. Number four, suppliers always think long term as any other brand and any other businesses basically. And suppliers are quietly always asking is this brand growing? Will they still be here next year? Is it worth investing attention into them? And sometimes they'll prioritize a smaller brand with clear momentum over a larger brand that feels stagnant or unpredictable. Number five would be relationship history. Trust compounds as any other sort of business acumen. So brands that communicate early and handle issues calmly and don't disappear after problems earn flexibility over time. This is why some brands get expectations and others never do. Now how does this show up in real life? If you're seeing these patterns, you really need to pay attention to these things. If the supplier replies, take 3 days plus moqs suddenly become non negotiable and then quality varies batch to batch. Delays are not communicated after they've already happened. And then nobody proactively warns you about issues. So these aren't random problems, they're signals. And here's the key insight. So a bad supplier and a supplier who doesn't prioritize you, those are two really different situations. One needs replacing, of course, and the other needs repositioning. And let me give you a real example. So we worked with a DTC brand doing around $3 million a year and they came in frustrated that deadlines are always missed, quality has always been inconsistent, communication is terrible and their Conclusion was we need a new supplier. Before we searched, we asked them a question. When did you last pay them? And this is what we found. So two recent invoices were paid 45 days late. PO came in bursts and then silence. Specs were changed mid production more than once. So from the supplier's perspective, that brand wasn't a priority customer, not out of spite, just logic. So it, it's very high friction, unpredictable, and financially risky. So we didn't replace the supplier first. What we did was we fixed their behavior first. So payment timing was one thing that we did, order predictability was another, and then decision discipline. And what happened was actually kind of wild. The same supplier recently replied and said they started to respond faster, flagged issues earlier added and improved consistency. So, yeah, it makes you think no replacement was ever needed. So this is where supply chain and finance quietly collide. Most founders focus negotiations on price, but suppliers often care more about when they get paid, how reliably they get paid. So a quick example would be, let's say you have a $50,000 order and a 5% discount. So saves you, let's say 2,500. That's nice. But improving terms from 3,070 to net 30 keeps $50,000 in your pocket longer and reduces the pressure and chaos inside your business. And less chaos usually leads to better supplier behavior. Payment habits as well aren't just financial decisions. They're relationship signals. So let's make this practical. Ask yourself honestly, how, how many invoices were late in the last 12 months? So looking back at, let's say, 20, 25, how many of those were late? How predictable are your orders? And let's say how often do specs change mid production? And also another one would be how do you, how fast do you respond when your supplier has a question? These couple of questions would definitely come into consideration when you're thinking about these steps. So another really critical one that you need to think about is do they warn you early or do you only hear about issues after? It's really bad. So your answers tell where you stand on the list. Here's what I want you to do today, not next month, not when things slow down. So first step would be picking one supplier, definitely your most important one. And then step number two, pick one lever. It could either be payment, chat timing, order predictability, faster decision making, and then step three would be sending one simple message. It could definitely be something like, as we plan the next few months, I want to improve how we get to work together. Let's here's what we're projecting for upcoming orders. And here's how we're thinking about payment timing and I would love to align so we can make this smoother for both sides. So that's it? No consultation, no demands, just clarity. Most brands never do this, which is exactly why it works. If one, if there's one thing I want you to take away from this episode would be this. Your supplier relationship is not fixed. It's constantly responding to how you show up and small changes done intentionally can create outsized results. This is, this is exactly the kind of thing where we're going to keep breaking down here, supply chain rules. And yeah, if this episode helped you share it, like, of course. And yeah, just, just stand by and share it probably with another founder who's who, you know, is frustrated with their suppliers because definitely they'll probably think they need a new supplier and sometimes they just need a new approach. So yeah, thanks for listening and I'm excited to be here as your new co host and I'm definitely going to be seeing you guys in the next episode by.
