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When most people dream of starting a business, the last thing on their minds is supply chain methodologies and best practices. But once you’re in business, you quickly realise that a reliable supply chain is a critical step that ensures long-term success. The right suppliers can help your business deliver high-quality products and services and meet customer expectations consistently. Unreliable suppliers, however, can cost you valuable resources or harm your reputation. It’s important to find a reliable supplier for several reasons:
- A good supplier ensures you can deliver the same quality of products and services every time, so customers have a consistent experience and stay loyal to your business.
- A reliable supplier reduces delivery delays or the chances of receiving substandard products. This means you are less likely to have product recalls or legal issues that can harm your business reputation.
- A good supplier can help you stay up to date on market trends and offer solutions you may not have considered.
- Once you’ve established a relationship with a good supplier, they may offer bulk discounts and longer payment terms. This can help you save costs, manage cash flow and offer competitive prices.
- As your business grows and evolves, the right supplier can serve as an ally, helping you find other trustworthy suppliers in new markets or niches.
Here are some steps you can take to ensure you find a supplier that’s the right fit for your business.
1. Identify your business needs.
As mundane as it sounds, the first step is to clarify your business needs and what you’re looking for in a supplier. Consider the following areas to create a list of requirements:
Required quality standards: Do you have strict quality standards that the supplier must meet? Does the supplier have industry-recognised certifications, such as environmental and safety certifications?
Your preferred price range and payment terms: You’re in business to make a profit. If a supplier’s prices are way out of your range, your profit margins may be affected – especially if you are in a price-sensitive market. Make note of the supplier’s payment terms: some offer instalment payments so you can pay for products over time, while others may require upfront payment, especially if you are working with them for the first time. Some suppliers may offer volume discounts too.
Frequency of supply: How often will you need merchandise and supplies? What capacity would you like the supplier to fulfil? Do you experience periods of low and high demand?
Local or overseas supplier: Do you prefer a local supplier or an overseas supplier? You may need both. For example, you may choose to source perishable ingredients locally to ensure freshness and consider overseas suppliers for nonperishables. For local suppliers, consider delivery options and proximity. For overseas suppliers, consider warehouse locations, shipping routes and delivery lead times.
Specific industry requirements: Do you have specific industry regulations the supplier must meet? These may be standards set by regulatory bodies. For example, if you sell or import foods, you may need to adhere to supplier verification requirements outlined by the FSA or similar laws in your location.
Once you write out your requirements, it’s time to start looking.
2. Identify the best suppliers.
Here are some ways to find reliable vendors.
Search online: This is usually the easiest place to start. Searches for “product + supplier + location” in any search engine usually return solid leads. If you want to take a shorter route, find online directories in your industry. These will usually provide a curated list of suppliers sorted by important characteristics, such as location and product category, sometimes for a small fee. A search for “product + supplier/wholesaler/manufacturer + directory” will point you in the right direction.
Attend tradeshows and exhibitions: Tradeshows are a great place to meet potential suppliers in person and get a firsthand feel of their products. Before attending a tradeshow, find the schedule, the floor plan and the list of exhibitors so you can maximise your time. Come prepared with your list of requirements to have a productive conversation. Be sure to collect brochures, samples and other available resources to help with your decisions.
Seek recommendations: Talk to other business owners, partners or colleagues who may know reliable suppliers. Ask for recommendations in online business forums or groups. Sharing your list of requirements will help others recommend suppliers who might be a good fit.
3. Assess potential suppliers.
Once you’ve created a list of potential suppliers that meet your criteria, consider these factors:
Communication style: How quickly does the supplier respond to inquiries? Do you like their communication style? If it’s difficult to get a hold of a supplier at the enquiry stage, it’s safe to assume that such problems will linger even after establishing a relationship.
Reputation: Are the reviews on the supplier’s website from real businesses? Can you find past or current customers? If possible, reach out to those customers and ask them about their experience. Read reviews from third-party sites and take note of the common complaints. Look for how the supplier has handled disputes in the past.
Ethical practices: This is particularly important if your business is built around sustainability and responsible sourcing. Is the supplier clear about their production and sourcing processes? Ensure the supplier shares similar values and can show evidence of their processes.
Questions to ask a potential supplier:
- How long have you been in business?
- What quality control processes do you have in place to ensure consistent product and service quality?
- What is your current capacity?
- Can you scale if my business grows?
- Can you handle fluctuations in demand?
- Can you make specific product customisations?
- What if I need special packaging?
- What are your lead times for order processing and delivery?
- How do you handle time-sensitive requests?
- What is your pricing structure?
- Do you offer volume discounts or price breaks?
- What are your payment terms?
- Are there any additional fees or charges I should know about?
- Can you provide information about your supply chain management practices, including inventory management and order fulfilment?
- How do you ensure compliance with regulatory standards and any industry-specific certifications?
- Do you have any sustainability initiatives in place, such as environmentally friendly practices or responsible sourcing?
- How do you handle returns, replacements or warranty claims?
- Can you provide references from existing clients who can vouch for your reliability and quality?
- How do you handle any issues or complaints that may arise during the course of a business relationship?
4. Choose your supplier.
To make things easier, consider creating a rating sheet to score suppliers based on your criteria, the questions you ask them and information from your research. Naturally, you should consider the suppliers who score the highest.
Even after you’ve chosen your suppliers, the rating sheet can serve as an important reference document. For example, if you ever need a backup supplier, you can choose the next top-scoring supplier on your list.
5. Order samples.
Before you commit to a long-term relationship, you may want to place a test order and confirm all the good things you’ve heard or read. If you make a long-term commitment up front and encounter issues along the way, it may be difficult to back out. If there are specific quality requirements you want to check, be sure to include those in your sample order.
Supply chain management best practices
While you may have a great relationship with a specific supplier, it’s important to have alternative sourcing options and not to rely on a single supplier for all your needs. For example, you may experience periods of unusually high demand that your current supplier cannot meet. Unforeseen events can also cause supply chain disruptions that affect your supplier’s output.
Two effective methods you can adopt to increase supply chain resilience
The first option is to have a flexible backup supplier who can respond to requests in the case of a disruption. This method offers you the most flexibility, but it may also mean higher costs and a more complex supply chain.
The second method is to monitor your primary suppliers closely and assess the possibility of a disruption regularly. This helps you anticipate disruptions and make necessary adjustments without committing to a secondary supplier.
Regardless of the method you choose, managing multiple suppliers manually can be challenging and time-consuming. Use inventory management tools to stay in control of all orders. Square for Retail includes vendor management features so you can keep track of all your vendors in one place. Plus, it gives smart stock forecasts and generates automatic purchase orders when you are low on items.
Once you have your vendors in place, appraise your supply chain regularly to identify bottlenecks and to ensure efficiency.
