How can I find the right suppliers for my business?
Selecting the wrong suppliers can lead to frustrating delays, angry customers and shrinking profitability. What could be worse? Well, suppliers can fail, leaving you high and dry and unable to service your customers.
Picking the right ones will allow you peace of mind and business continuity.
If great customer service is one of your main goals, align your suppliers with your objectives. Make sure you know what you want from them. Setting your criteria will enable you to evaluate suppliers against your exact needs.
Whatever process you use to source potential suppliers and however you negotiate and contract with them on price, there are some other factors to consider:
It sounds obvious, but often people don’t bother. Talk to your potential supplier’s major customers to get a proper picture of his capabilities.
Follow up on testimonials that the supplier gives you and confirm these with the source. His customers can help you get a good sense of what it is like to work with him on a day-to-day basis.
Do some due diligence
How do you know if the supplier has sufficient cash flow to fulfil your requirements? Do a credit check through a reputable financial agency. If you are his sole customer, you are particularly at risk.
Whether the supplier is a distributor, manufacturer or service provider, make time to visit their premises and see how they operate.
Quality and reliability
It’s not only about price. Quality must be consistent whether it is a service or a product you are buying. Your customers will associate poor quality with you, not your suppliers.
Monitor performance based on agreed measures e.g. number of returns or late deliveries, and monitor them regularly. Develop a working relationship based on teamwork and honest feedback.
Good service and communication
You need suppliers that can deliver in the right place at the right time. You also need to know who you can talk to when they don’t. Make sure there are clear lines of communication both for regular operations and for times of crisis and have an escalation process.
Suppliers must give you ample warning if they are having difficulties so that you can take appropriate action.
Have alternative suppliers
Working with one preferred supplier for a specific item or service is fine, but always have a plan B. With more than one source you are covered, even if your main supplier goes out of business or you have a sudden spike in your requirements. A sole supply source can be dangerous, so don’t give exclusivity to any supplier.
Strike a balance across price, reliability, quality, and service.
Above all, make it stress-free to do business with you
Your suppliers will provide a better service to you if you make it easy for them. Have a slick process for issuing orders, managing accounts queries and responding to operational issues. Make sure they have the contact details of your key staff on file.
Bearing in mind these important issues will help you avoid pitfalls of working with suppliers that are not prepared to collaborate with you for mutual benefit.