In the Know: Building relationships with wholesale propane suppliers

In the Know is a monthly partnership between LP Gas and Propane Resources. This month, Allan Degenhardt and Jeff Thompson evaluate the relationships between propane suppliers and marketers.

Photo by LP Gas staff

QUESTION: How do propane marketers forge and sustain robust relationships with propane suppliers?

ANSWER: In the dynamic and competitive world of propane distribution, the relationship between propane marketers and their suppliers is a crucial partnership that can dictate the success of their operations. Establishing and maintaining strong supplier relationships is paramount.

Understand the market and identify reliable suppliers: The first step in cultivating a strong supplier relationship is to gain a comprehensive understanding of the propane market. This involves keeping abreast of market trends, price fluctuations and regulatory changes. Propane marketers should conduct thorough research to identify potential suppliers who are not only reliable in terms of product quality and delivery timelines but also align with their business values and customer service standards.

Once potential suppliers are identified, vet them thoroughly. Examine their track record, financial stability and reputation within the industry. Seek testimonials or feedback from other marketers for invaluable insights into a supplier’s reliability and service quality.

Build a partnership based on mutual benefits: After selecting a supplier, the focus shifts to clear communication of expectations and needs. Propane marketers should openly discuss volume requirements, delivery schedules and any specific customer needs with their suppliers. In return, they should understand the capabilities and constraints of their suppliers.

Negotiating fair and transparent contracts is a vital part of this phase. Contracts should be flexible enough to accommodate market changes yet robust enough to ensure reliability and consistency in supply.

Communication and collaboration: Regular interaction with suppliers through meetings, calls or industry events helps in staying aligned with each other’s goals and expectations. It’s crucial for propane marketers to provide feedback to suppliers and to be open to receiving suggestions.

Collaboration can also extend to joint efforts in areas such as market research, customer satisfaction surveys and exploring new market opportunities. Such collaborations can strengthen the relationship and lead to mutual growth.

Adaptability and crisis management: The propane industry can be unpredictable, with factors like weather conditions and geopolitical events affecting supply and demand. A strong supplier relationship should be able to handle uncertainties. Propane marketers and their suppliers need to have contingency plans in place to manage supply disruptions.

In times of crisis, transparency and prompt communication are key. Keeping suppliers informed about changes in demand or operational challenges and vice versa can help both parties to react quickly and effectively.

Long-term commitment and trust building: Building trust is a gradual process that comes with time and consistent delivery on promises. Propane marketers should aim for long-term relationships with suppliers rather than short-term gains. This involves honoring contractual commitments, timely payments and showing loyalty during market downturns.

In return, suppliers are likely to offer better service, favorable pricing and may prioritize your needs during supply shortages. Trust also opens the door for more favorable credit terms and other benefits.

Leverage technology for efficiency: Technology can enhance the supplier-marketer relationship. Tools for inventory management, order tracking and automated reordering can streamline operations and reduce errors. Sharing technological resources can improve efficiency for both parties.

By focusing on these areas, propane marketers can build robust partnerships that will support growth and ensure a stable supply chain in an ever-changing industry.

Jeff Thompson and Allan Degenhardt are supply and risk management experts at Propane Resources. Reach Thompson at jeff@propaneresources.com or 888-739-6732 and Degenhardt at allan@propaneresources.com or 816-813-1956.