Long-term supplier relationships in the steel industry are built on trust, reliability, and years of mutual benefit. But what happens when that trust starts to erode? Maybe it’s late shipments becoming routine, quality slips going unaddressed, or price hikes arriving without notice. As a Vendor Relations Manager at a steel service center, it falls on you to address underperformance—without blowing up a relationship you may need to rely on in tight markets.

Here’s how to diagnose, address, and if necessary, recalibrate your approach to an underperforming long-term steel supplier.

Recognize the red flags early

Underperformance doesn’t always show up with a bang. It often begins with subtle changes:

Shipments arriving one or two days late more frequently

Increase in material deviation outside spec

Slower response times from account reps

More “we’ll look into it” and fewer resolutions

Track and log these incidents, even informally at first. If you’re seeing a pattern over a 60–90 day period, that’s your signal to initiate a structured review—not wait until a major failure forces your hand.

Use data to make the case

If you’re going to hold a vendor accountable, you need more than anecdotes. Collect hard performance data from your ERP, logistics tracking, and quality control reports. Focus on metrics that directly affect your service center’s operational efficiency:

On-time delivery percentage (actual vs. SLA)

Defect or rejection rates

Time to resolve shipment or quality issues

Variance in pricing vs. contract benchmarks

Turn these data points into visuals—simple charts or scorecards you can use during review calls. Vendors respond differently when they see trend lines instead of hearing complaints.

Initiate a performance dialogue—not a confrontation

Your first move shouldn’t be a threat to cut volume. Schedule a formal performance review with your supplier’s account manager and operations liaison. Structure the meeting as a collaborative session with this tone:

“We value this relationship, but we’ve seen some service degradation.”

“Let’s walk through the areas where we’re seeing friction.”

“Here’s the impact on our operations—what can we do together to correct course?”

Keep the conversation solution-oriented. Most underperformance isn’t malicious—it’s process decay or resource misalignment that can be corrected with mutual focus.

Request a corrective action plan (CAP)

If the issues are confirmed, ask the supplier to submit a corrective action plan that includes:

Root cause analysis for missed SLAs or quality failures

Specific actions and timelines for correction

Designated point persons for implementation

Commitment to track and report progress monthly

Make it clear that this is a time-bound recovery effort—typically 60 to 90 days—with review checkpoints. Your role is to ensure accountability without micromanaging.

Rebalance volumes during recovery

While the corrective plan is in place, consider rebalancing a portion of your volume to secondary suppliers. This protects your downstream commitments while giving your underperforming vendor breathing room to recover.

Let the supplier know this isn’t punitive—it’s a supply continuity measure. For example:

“We’ll shift 20% of our CRC tonnage to Vendor B for 60 days while we monitor progress.”

“If KPIs return to target by Q3, we’ll return full allocation.”

This keeps pressure on while preserving the relationship.

Escalate appropriately if performance slips again

If the supplier misses its corrective targets, it’s time to escalate. That doesn’t mean cutting ties overnight—but it does mean raising the issue up their chain of command. Bring in their sales director or VP of operations and show them the trail of data, discussion, and recovery effort.

Use language like:

“We’re escalating per the terms of our SLA because the performance improvement plan has not yielded results.”

“At this stage, we need to consider shifting strategic volume if we can’t ensure basic delivery and spec adherence.”

Escalation should be direct but professional—always with documentation in hand.

Consider restructuring the relationship

If your supplier remains critical to your supply chain—due to geographic proximity, specialized grades, or capacity allocation—you may need to renegotiate how the relationship is structured.

This could involve:

Redefining volume commitments with stricter performance clauses

Requiring quarterly QBRs with multi-department involvement

Adding financial penalties or credits tied to SLA breaches

Transitioning some purchases from contract to spot basis to increase flexibility

By changing the terms, you reset expectations and reduce operational risk.

Plan for exit—quietly and methodically

Sometimes the damage is too deep or the supplier no longer meets your strategic needs. If you decide to exit the relationship, do so methodically:

Phase out volume gradually while qualifying alternate mills

Ensure all outstanding credits and disputes are settled

Transition documentation, specs, and MTR standards to the new vendor

Avoid emotional exits. Let the numbers—and your process—guide the offboarding. And always maintain a professional rapport. Steel markets are cyclical, and today’s exit might be tomorrow’s backup plan.

Build a forward-looking risk radar

Every long-term supplier deserves a chance to course-correct—but your job is to prevent repeat patterns. Establish a quarterly risk review process with your procurement team to flag:

Supplier performance drift

Changes in mill ownership or financial status

Disruptions in logistics or labor that could impact operations

Use these early signals to stay proactive, not reactive.

Final thought: loyalty should be earned—continuously

Being a long-term partner doesn’t mean being immune to scrutiny. The best mill relationships are those that evolve under pressure—and get stronger because of mutual accountability. As a Vendor Relations Manager, your goal isn’t to “catch” suppliers failing. It’s to drive the kind of clarity, urgency, and performance that protects your business quarter after quarter.