Choosing the Right Suppliers

Five key tips to choosing the right supplier for your small business

Choosing the Right Suppliers

Finding the right suppliers is a key decision for any organisation. A good supplier is easy to deal with, consistent and always there for you. In turn, this helps you to focus on your business and deliver a high-level of service to your customers.

On the other hand, an average supplier can, at best, take up your valuable time and, at worst, can cause a knock-on affect that impacts your service, clients and profits. In this article, we share with you tips on choosing the right supplier.

Price isn’t everything

In the current climate, price is often the overriding factor when choosing a supplier. The key is to ensure that you’re getting value, as lower costs could indicate that corners have to be cut to deliver the service at that price. Too low a price could also indicate that the supplier is having financial problems, and has cut prices in order to win the business. The result? They make a tiny margin that puts their business even closer to the brink, which could bring you problems too.

For any important supplier, you should carry out a credit check to try to avoid the above scenario from happening. However, with this information not necessarily up to date, ask for references from the potential supplier too. This should help fill in the gaps, and remember, a successful supplier is a stable supplier.

People buy people

Resources are ultimately just as important as financial stability when you’re trusting a supplier with an important contract. If your contract represents more than 20% of the supplier’s business, you need to be sure they can cope. As such, find out how many other large contracts they have delivered (or are delivering).

If you do become one of the supplier’s biggest clients, then you should feel like it. Having a good relationship with your contact is massively important, and is understandably often one of the determining factors in choosing a supplier. However, just because you get on with someone, doesn’t mean this should be the sole reason why you choose them. If your contact is to leave, then who would look after you? In this respect, there’s no substitute for seeing the whites of their eyes to get a good feeling of the company’s people and level of service.

Expect more than just their word

As alluded to earlier, your suppliers’ service can impact your own. Their consistency in delivering on time, minimising mistakes and timeliness in resolving issues are very important factors which, if dealt with badly, can negatively impact your customer satisfaction.

As such, bear these aspects in mind when asking references about the supplier in question. Also, ask for evidence of what quality controls the potential supplier has in place. For example, the ISO 9001 standard is often used as a way of demonstrating a consistent, high level of service. Look to see the supplier has this certification, together with anything else complimentary to show that their people and processes are managed well.

Location, location, location

These days, many suppliers are found through a Google search, which has eroded traditional local supplier relationships. This is despite the obvious advantages of them being just around the corner; responsiveness is a big plus, whilst managing the supplier in general becomes easier.

Location may of course also affect price; it’s important to ensure quotations include any associated costs related to travel. There’s also corporate responsibility to consider; the further the distance from you, the worse the environmental impact. Dealing with suppliers is also good for the community, helping the local job market.

Engaging the whole supply chain to encourage the same ethos helps to multiply the impact of the abovementioned benefits. By having a shorter supply chain in place, there is improved certainty and predictability, costs can be lower, and there is huge environmental benefit too.

There’s no substitute for recommendations

References are great, but there are other places you can go to get an opinion on suppliers. Friends and family are a good first point of call; do they have a recommended supplier for the same solution where they work? You’re far more likely to get a true assessment of the supplier’s strengths and weaknesses from someone you know well.

Networking groups are also a great way of getting a recommendation. Breakfast clubs and local Chamber of Commerces can often point you in the direction of well known suppliers that are tried and tested.

This article was written by our business expert Robert Fenn of the British Assessment Bureau.

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