Choosing the right supplier

One of the tasks, I'm responsible for carrying out is to find the right supplier for the right purchase buyer and occasionally vice versa. Building a stable business relationship between both parties. Sound easy right?

Many purchases buyers seem to get this supplier issue backwards. They think that because they write the order/check, they're in the dominant position.

Let's get this right you need good and reliable suppliers. When you find them, treat them like gold. Work as hard on building a good supplier relationship as you do building a relationship with your customers.

Choosing the right supplier involves much more than scanning a series of price lists. Your choice will depend on a wide range of factors such as value for money, quality, reliability and service. How you weigh up the importance of these different factors will be based on your business' priorities and strategy.

These days some purchase buyers trying to save money by getting better prices from the suppliers. But is getting a better price always a better deal?

I can tell you from experience that price should be only one factor. Here are my four most important things to consider when choosing vendors:

1. Price - Yes, the price is important. But if your supplier cannot make a reasonable margin on your business, then something is going to suffer. The lowest price is not always the best value for money. If you want reliability and quality from your suppliers, you'll have to decide how much you're willing to pay for your supplies and the balance you want to strike between cost, reliability, quality and service.

2. Strong service and clear communication - You need your suppliers to deliver on time, or to be honest and give you plenty of warning if they can't. The best suppliers will want to talk with you regularly to find out what needs you have and how they can serve you better. Depending on your relationship with your supplier may be good to include them in some of your strategy meetings.

3. Quality - The quality of your supplies needs to be consistent, your customers associate poor quality with you, not your suppliers. Remember is not only to vendors' adherence to specifications, but also whether the product is packed adequately, labelled correctly, and includes agreed-upon marketing materials. It's important for you to know the actual cost of a supplier's failure in any of these categories.

4. Alignment - It's this fourth category that many purchase buyers fail to consider. And it's just as important as the first three. It's important to know your suppliers market share. If they are a first-tier supplier to your industry and your company is a start-up you, then your alignment may not match, i.e. the MOQ may be too high for you, resulting in lack services & support etc. A tier three supplier may offer you lower MOQ, resulting in better service and support also a better price. 

A good alignment with the right supplier could benefit your business vastly, combining resources, on everything from providing customer insight and additional tools and processes, to developing unique promotions and volume incentives. This strength both businesses. A good supplier will want to learn more about you; how you sell, what's important to you, your core values, your clients and so forth. As a result together grow profitably together.

Developing good relationships with suppliers is not a complicated process. Be communicative, tell them of your needs and standards, treat them fairly, it's ok to be sometimes demanding, be loyal, and pay them on time. It's that easy.

I understand some business need several same suppliers, that's a different chapter.