10 Things to Carefully Consider When Choosing Suppliers for Your Business

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Great suppliers are essential to successful businesses, allowing you to produce and deliver your goods and services. For small to medium businesses, the challenge is to find a reputable supplier with competitive pricing. To find the right supplier partner, you’ll need to know what your business is looking for and have a formal process for evaluating vendors.

1. Recognise the value of good suppliers

Start by recognising the value of good suppliers and mutually rewarding supplier relationships. From internet services to raw materials, these goods and services are fundamental to your business. Your suppliers can also be vital sources of market information, and they can even help you with marketing and product design.

2. Understanding the different supplier types

Your business will likely be dealing with different supplier types, ranging from tradespeople and distributors to importers and manufacturers. Recognise these different categories and how you’ll need to deal with them differently. For example, a manufacturer makes what they sell to you, while distributors are a middleman for buyers. This can impact how you negotiate, contract, and work with these suppliers.

3. Determining your criteria

If you don’t know your requirements, you won’t be able to assess bids and quotes. Common criteria include price, quality, and delivery or service time. You might also have special requirements like minimum and maximum orders, payment methods, returns, time to resolution of errors, and guarantees.

Other less tangible criteria could include friendliness, attentiveness, efficiency, and transparency. You’ll want a good partner who’s motivated to achieve the standards you want. Choosing the right supplier from the outset ensures you have a partner who is motivated, enjoys working like a team member connected to your business, and works in your business’s best interests.

4. Outlining your selection process

Having a formal selection process rather than working on an ad hoc basis ensures you address every criterion. If it’s a manufacturer of high volume raw materials, you might ask for proposals or even tenders from a shortlist of suppliers. If it’s an ISP plan, your process might be more straightforward, such as going online to compare plans.

5. How to reach out to suppliers

Reach out to your shortlist with a phone call or formal written requests for proposals or requests for quotations. For more complicated goods or services, give them a detailed outline of what you need, including quality standards and contract timeframe. Once they respond, you can evaluate their submission or quote against your criteria.

6. Sourcing reliable tradespeople

Whether your business is small or medium in size, tradespeople will be an important supplier, assisting you with everything from a safe electrical system to plumbing and renovations. You’ll want to check their licensing and qualifications to make sure they meet the legally compliance standards for conducting the work.

Check the tradesperson has liability insurance for any damage to your property. A written, itemised quote, along with completion date and an explanation about what happens if there’s unforeseen additional work are also essential. Don’t pay upfront; pay the balance only after the job is complete, and beware of tradies requiring cash payments. Look for online reviews, preferably verified ones, and check out testimonials from past customers.

Taking extra care with electricity

Electrical work has a direct impact on safety in your business, so make sure you’re working with someone with the right skills and experience. Positive references, membership of professional and trade associations, and great communication are some of the signs of a reputable electrician.

7. Formalising the supply agreement

Once you’re ready to engage, you’ll need a service agreement, a client agreement, or some other formal contract detailing your supplier relationship in full. Your quality requirements should be integrated into the contract. Seek professional advice if you have doubts about fine print or terms and conditions.

8. Considering future changes

Check your service contract has provisions for making changes, rather than locking you into rigid terms and conditions. For example, you’ll want to have room to negotiate discounts, enforce quality, and escalate complaints. Don’t sign a long-term contract committing your business to automatic price increases that forbids you from reviewing or ending the relationship.

9. Monitoring performance and quality

Even the best suppliers can have lapses in quality, so outline your internal process for performance management. Usually this means having someone in charge of review and communication with the supplier. You’ll want to reference your contract of supply or original quote as you’re reviewing their performance.

10. Knowing when to move on

Removing inefficient suppliers can eliminate unnecessary costs and boost your business efficiency. Be aware of signs of unreliable vendors, like higher cost with compensating quality, and a lack of transparency. Suppliers should be happy to share their credentials, let you tour their premises, and allow you to ask questions.

Choosing the right suppliers for business success

By following these strategies, you’ll be able to align your supplier-selection process to your requirements. This in turn ensures you get the product or services you need from the right supplier. It could also help you establish long-term, mutually rewarding relationships and minimise stress and hassle in choosing partners. If you’re looking for a reliable electrician to partner with your business, give Platinum Electricians a call today to discuss your individual needs and requirements.