It’s not always easy to find the right supplier whatever stage your small business is in. While price is a major consideration, there other factors to consider. You need dependable suppliers who provide quality products or services, assure on-time delivery and meet your terms and conditions. You also want to do business with companies that have a good reputation and are financially stable.
While you are making an investment in your suppliers, the same should be expected of them. In an ideal situation, your suppliers should be a resource about the industry and even your competitors, suggest new business opportunities and also help you determine new products or services for your market.
Research potential suppliers
You have a number of resources to explore potential suppliers. You can begin with online research, ask business associates (inquire among your LinkedIn contacts and groups, for example) or look at trade magazines. Trade shows are a good place to look for suppliers. They provide an opportunity to meet with several candidates in one venue and you can have a one-to-one conversation to determine which ones are really interested in your business.
Whichever you choose, try to stay local. If you are working with suppliers who are far from you, it may take a long time to get the materials and merchandise you need. You also have freight costs to consider as well as potential shipping problems due to bad weather, accidents or vehicle breakdowns. Consider having an alternative supplier as a backup or working with two.
Conduct due diligence on supplier candidates
Try to pay a visit to a supplier’s factory or site to get a first-look at the operations. Then conduct a thorough background on a potential supplier’s:
- On time delivery record
- Quality controls and standards
- Use of latest technology/and or products and service
- Business processes – for example is it difficult to submit an order
- Professional sales and customer service representatives
- Financial terms
- Ability to communicate with you during an emergency
Even after you’ve done your due diligence, get references from customers preferably in your market or industry or similar ones.
Set performance metrics
Once you’ve selected your supplier, put performance metrics in place. Among them, periodically assess:
- Meeting delivery deadlines
- Quality of shipments
- How often do you need to return items/shipments
- Cooperation in resolving issues
Also periodically check the industry for pricing to make sure you are getting the best; if not try renegotiating your contract.
Your suppliers have a major impact on your small business. Make collaboration and communication a priority to ensure that the relationship is a win/win for both parties.