Choosing the right suppliers to partner with is always a topic of conversation for owners because so much depends on your ability to choose the right ones to work with. That’s why we decided up update and republish this article from a few years back. Keep reading for four steps to help you choose the best suppliers for your business.
Choose The Right Supplier For Your Business
Supply and demand is the name of the game and when your customers are counting on you, you need to know that your suppliers aren’t prohibiting you from meeting the demand. Managing your company’s vendor and supplier relationships is critical and you need to secure a vendor base that will ensure that you’re able to deliver your products and services on time, at the right price and in line with your high quality standards. But how do you know which supplier is the right supplier?
1. Define Your Plan Of Action
How will you identify potential suppliers? Will you put out a call for bids or will you identify a short list based on research and referrals? Take a moment to think through your plan and answer the following questions:
- How will you identify suppliers?
- How long will the search period last?
- Who will review proposals and help narrow the list?
- How will final bid submissions will be evaluated?
2. Identify Your Selection Criteria
The first step to choosing the right vendor is to compile a list of criteria upon which to base your search. Setting your search criteria in advance will help you evaluate potential suppliers on the qualities that matter most while ensuring that nothing is overlooked. Your list could include:
- Lead times from receipt of an order to delivery.
- Minimum and maximum order quantities.
- Storage and handling facilities.
- Quality assurance processes.
- Payment terms and conditions.
- Delivery methods.
- Return policy.
- Agreement or contract period.
3. Put Out The Call & Evaluate Bids
Once you’ve identified your selection process, reach out to your top candidates for a Request for Proposal or a Request for Quotation. The bid should include full details of the products or services you are requesting as well as quantities, delivery dates and quality standards. It is also a good idea to ask bidders additional information about the following:
- The processes they use.
- The stability of their raw material suppliers (if applicable).
- The reasons they believe you should choose to work with them.
4. Monitor Performance
Mistakes happen from time to time but, with the right procedures in place, they don’t have to be the end of the world. The best way to maintain your supplier relationship is to maintain regular communication. This can be done by:
- Ensuring that you have a direct point of contact with the supplier.
- Conducting regular performance reviews.
Working with the right supplier can help you serve your customers better while ultimately minimizing cost and maximizing efficiency. Work through the points mentioned in this article to ensure that you have the best suppliers to help you along your business journey.
Email Rea & Associates to discuss the effectiveness of your existing suppliers or to put together a process that works best for you.
By Kyle Stemple, CPA, CGMA (New Philadelphia office)