Suppliers are a requirement to run most businesses. If you operate your business from an office space, you will need office supplies (stationery, printer ink, etc) as well as internet access. These are services and products that a supplier provides. But, how do you get the right supplier? In this article, you will learn how to choose the right supplier for your business.
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Suppliers (also known as vendors) are also responsible for providing the raw materials you use to manufacture your products, as well as the wholesale goods you plan to resell. From this, it is easy to see that choosing the right supplier is very important to run your business smoothly.
When it comes to choosing the right supplier, it’s not as easy as picking one out from a catalogue. Emotional intelligence, which is very important throughout the business world, is especially relevant here. You will want to take into account factors like pricing, quality of products, reliability, and so on. The value you attribute to each factor is usually determined by your business strategy.
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Suppliers Can Add A Lot of Value To Your Business
The function of a supplier can be much more than just supplying raw materials and office supplies. The right supplier can also be a priceless well of information on your competitors, new products on the market, and tips and tricks for selling a particular product to the end-consumer. Suppliers can become your business partners and work with you to meet the demands of your customers.
In essence, choosing the right supplier is important but can also be very difficult. For many procurement managers, it’s even one of the hardest decisions they have to make. Making a mistake when selecting a vendor can lower the quality of your deliverables and damage your reputation. We all aim to avoid such horror stories!
That’s why in this article, we’re going to go through an easy-to-follow guide to help you choose the right supplier for your business.
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How To Choose The Right Supplier
1. Apply Strategic Thinking
First of all, what products or raw materials do you need to run your business? Do you need palm oil? Rice? Maize? Imported wristwatches? You need to know what you want and then do your research to find a list of possible vendors.
You can research potential suppliers online or seek business advisors and other business contacts for their recommendations. The important thing is to gather several plausible options before you make your decision.
2. Know What Makes A Good Supplier
Reliability is one of the most important factors when it comes to choosing the right supplier. A good supplier is reliable. They will deliver the right amount of raw materials, the right number of goods at the time agreed on. Furthermore, the goods will always arrive in good condition.
Admittedly, it can be a bit confusing to figure out what supplier is most reliable without actually trying them out. Consequently, sometimes, it is best to defer to a larger supplier. A large supplier is more likely to possess the resources to maintain backup systems, delivery software, and to fulfill your order even when something goes wrong on their end.
However, smaller suppliers can be just as reliable. If your business requires a large number of products or materials, and your supplier is a small company, it is likely that they will devote more attention to your business and offer you a much better service than you would get from a large supplier.
As a business person, it is crucial that you fulfill your responsibilities to your own customers. Therefore, reliability on the part of your supplier is paramount. To provide yourself with some backup, you could get two suppliers instead. One would be your main and the other would function as a backup.
A good supplier is stable. A stable supplier ideally has been in the business for a while. The supplier should also have a strong reputation with other customers and have a clear company hierarchy.
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Location is also very important to determine a good supplier. If your supplier is far away, and you need to get something quickly for a customer, this would pose a serious problem. Your orders could take a really long time to reach you. And of course, the longer the delivery time, the more expensive the shipment.
Also, longer delivery times are more likely to yield complications and delays. Remember Murphy’s Law: whatever can go wrong will go wrong.
Determine delivery charges before you order and if possible negotiate cheaper charges with the supplier depending on how much you order.
Competence And Quality
A good supplier is on top of the market. They can offer the most advanced or updated products and services. Their employees are adequately trained and competent. And the quality of the goods they are offering is consistently high.
A good supplier should also have the potential to exceed expectations. If your business were to expand and the number of business branches was to rise, could your supplier scale up to match?
When considering your suppliers, you need to be thinking about the long term. If you would like to double the speed with which you make deliveries in 6 months’ time, your supplier needs to be able to step up.
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3. Consider Pricing
It almost goes without saying that price is a very important factor when deciding on a supplier. It is crucial that you consider production costs as well as how much you will need to make in revenue to finally break-even.
However, it might be a mistake to focus all your energy on getting the cheapest price possible. As we’ve seen so far, there’s more to finding the right supplier than the amount on an invoice. Suppliers are also businesspeople. They too are selling their wares to make a profit. You don’t want to demand a discount on every single order or drag your feet before paying your bill. If you do, you just might lose a great supplier.
The lowest price does not always mean you’re getting the best value for your money. Earlier we discussed the importance of quality. Even if you get away with purchasing a lot of products for a relatively cheap price, if they are of low quality your customers will associate the poor quality with you and not your supplier. Here, it is important to strike a balance between pricing, quality, and reliability.
That said, you need to keep your eye on the prices in the general market. If your supplier’s competition seeks you out, offering the same goods for a lower price than your current supplier, something needs to change. Go to your current supplier and try to talk it out. If it appears that your supplier is just unwilling to change their prices with the market, you might have to take your business elsewhere.
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4. Seek Transparency
Suppliers who allow you to talk with their managers, interview workers, and visit their factories are usually a better gamble than the opposite. The more transparent your suppliers are, the easier it is to come to a decision about the quality of their services. Suppliers with nothing to hide are often more transparent.
In a similar vein, you want to seek out suppliers who are willing to meet you where you are. In addition to transparency, the right supplier should be open to forming a closer working relationship with you. This way, you both get the best value for your input.
With these suggestions, you have everything you need on how to choose the right supplier. This piece will help you form the right strategy to choose the right supplier for your business.
Do you rely on suppliers for your business? How did you choose the right ones? Let us know in the comments!
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