Choosing the right supplier for your business is an important process, and involves much more than simply looking down a price list. There are many factors that you need to consider, and rushing into the process could hinder your business and, ultimately, your profits. Below we have laid out a guide on how to choose your suppliers.
Set the criteria that you would like your supplier to fulfil
The first step is to establish the rules that you would like your supplier to abide by in your business relationship. This will help you to narrow down the search early on and will help you to be more structured in your search rather than compiling a huge list of suppliers.
Your search criteria should include factors such as:
- The lead times that you can expect once you had ordered to delivery date
- If you have any minimum or maximum order quantities
- What your supplier’s storage and handling facilities are like
- How your supplier will deliver the goods
- What the supplier’s payment terms are
- What their quality assurance and returns policies are like
- How easily contactable they are
These are just some of the factors that are involved in helping you to choose your suppliers, and being clear on these from the beginning will help you to whittle down the thousands of suppliers available on the market.
How would you like to find your supplier?
Another part of the criteria selection process is deciding how you would like to go about finding your supplier. There are multiple ways of doing this, such as by publishing ads in trade magazines or researching and approaching suppliers directly yourself.
Remember that each different avenue will capture a different audience, so it may be worth having several different approaches to try and get as large a selection as possible. Have qualified members of your team review and narrow down the shortlist of suppliers to those that are best suited to your company.
What should you be looking for when choosing your suppliers?
There are several factors to consider when choosing your supplier, and much of it will depend on your business model and how it fits in with your company culture and ethos. However, there are some areas that businesses look for consistently among suppliers:
Price is perhaps the biggest factor to consider when choosing your supplier. You need a supplier that is going to be able to offer real value for your business and offer you the most profitable margins possible. The price will obviously vary from business to business, but be sure that you find one that will still leave you making money while not sacrificing on quality.
This leads onto another extremely important factor; quality. Quality covers a large range of factors, with everything from materials used to packaging to labelling. You need a supplier that can deliver consistent quality across each and every product. Poor quality will lead to negative customer reviews, and it’ll only be your business that suffers.
Ensure that the quality assurance processes that your supplier has in place are sufficient enough to match the level of product that you want to put out to market.
You need to look for a high level of service and reliability when you choose your suppliers. This includes things such as fulfilment rates, late orders, and how quickly a supplier resolves an issue. If a supplier falls down in these areas, then it will have an impact on customer satisfaction too.
Some businesses have noted that they can see a direct correlation between customer satisfaction scores and supplier scores.
Finally, how well do your businesses align? This will come down to multiple factors, such as does your supplier speak the same language as you? Do they have the same ethos as you? Some suppliers will visit your business, get to know what you’re about, and be as passionate about making your customers happy as you are.
It’s much better if you can be partners with your suppliers, rather than just people who do business together.
Choosing the right supplier
Once you have considered all the above factors and whittled down your shortlist, you’ll need to get quotations from your potential suppliers and compare these against each other. Consider what is most important to you; is it price, quality, location, or another factor entirely?
Be sure that the supplier you choose is the one doing the work, as some will outsource the work to a third party. Once you’re happy with your selection, begin to negotiate terms and conditions with the supplier and then you can push ahead with your new profitable partnership!