All companies need suppliers; it’s just a fact. But not all suppliers are the same. Entrepreneurs are well aware of this and most are familiar with the trials and tribulations of finding the right ones. The reality is that suppliers vary hugely. Finding good and reliable suppliers can bring enormous benefits to a company. Investing time to choose the right supplier is like investing in the future.
The most effective suppliers are those who offer products or services that match – or exceed – the needs of a business. So when looking for suppliers, it’s a good idea to know the business needs and what you want to achieve by buying, rather than simply paying for what suppliers want to sell you.
For example, if you want to cut down the time it takes you to serve your customers, suppliers that offer you faster delivery will rate higher than those that compete on price alone. This might make a big difference in terms of turnover and future expansion. Choosing a supplier that fits these needs is definitely the way forward.
What are the qualities of a good supplier? First and foremost, reliability. It’s always important to remind ourselves that if the supplier fails, this may have negative consequences, i.e., you may let down a customer. Next comes quality. The quality of supplies should be consistent. Poor quality may impact negatively in the final product. Last but by no means least, value for money. But remember, the lowest price is not always the best value for money. If what we look for is reliability and quality from suppliers, you’ll have to decide how much you’re willing to pay for these supplies and the balance you want to strike between cost, reliability, quality and service.
Once the business needs are clearly defined it is time to create a manageable shortlist and approach suppliers. Ask for written quotations or samples, if appropriate. When approaching suppliers it is useful to provide them with a brief summary of what your requirements are and how much business you anticipate. It’s worth asking potential suppliers to give you a firm price in writing for a short period of time, let’s say, three months. You can also ask about discounts for long-term or high-volume contracts.
Compare potential suppliers
Once you’ve got the quotation, start comparing potential suppliers in terms of what matters most to you. For example, the quality of their product or service may be most important, while their location may not be of any relevance.
Check that the supplier you employ is the one that will be doing the work. Some suppliers may outsource work to subcontractors, in which case you should also
investigate the subcontractor to determine if you are happy with this arrangement.
Negotiate terms and conditions
Once you’ve settled on the suppliers you’d like to work with, you can move on to negotiating terms and conditions and drawing up a contract. If you’d like to know more about this topic and other business-related matters, click here.