Choosing a new supplier is one of the most important decisions a business will make, as it will have a direct impact on your success. A good working relationship can lead to an increase in sales, and great service. In contrast, a bad partnership can result in unhappy customers, unfulfilled profitsand worst-case scenario, a failed business.
If you want to find a new supplier, or are currently researching into potentials; then make sure you take these five factors into account, to help find the supplier that is right for your business.
1. Supplier cost
Probably the most obvious – but equally important – factor to take into consideration when looking for new suppliers, is cost.
Of course, you’ll have a figure in mind as you’ll know which products you’re looking for, and how much you’re willing to pay. Even so, prices between suppliers can vary, so it’s important to shop around and see who offers the best deal. For instance, some suppliers may offer discounts on bulk-buying; or others may offset higher costs with better quality products.
You should weigh up all of the options when it comes to costs, before deciding which supplier is best in that respect.
There’s often a correlation between cost and quality: the more expensive the product, the better the quality. Regardless of price, there is still a predetermined, agreed level of quality, and you want to be sure that your expectations are met.
After all, the last thing you want to do is market your products as high-end, when your supplier sends you something completely different.
Quality doesn’t just refer to the physical product itself, but its associated aspects too. Are the products packaged adequately, protecting them in transit? Are they labelled correctly? Speak with potential suppliers to ensure that you’re fully aware of what they will offer you – you don’t want to sign a contract and then be disappointed.
3. Reliability and previous experience
It’s important to remember that when choosing a supplier, you’re essentially entering into a long-term relationship with them. It’s similar to hiring a new recruit – you’ll want to see references.
Don’t be afraid to ask for them: it makes sense that you would want to hear from businesses who have worked with specific suppliers in the past, as they can give you an honest account of what the partnership was like, and list any good or bad points.
If you’re deciding between two suppliers, references can make all the difference when deciding who to choose.
Your chosen supplier will directly reflect upon your business. If they send over a batch of products two weeks late, the customer who ordered that product will blame you, not your supplier.
4. Shared culture
Expectations are only met when they are clear on both sides. A good supplier relationship is built on shared cultural goals and attitudes. Speak with suppliers directly to find out how they like to work with other businesses. If you want constant communication but they prefer to just “get on with it”, then realistically, that’s not going to work.
When speaking with suppliers, whilst you’ll have questions to ask them; it’s likely they’ll have equally as many questions for you. Use this time to gauge whether your culture and expectations are similar, as you should get a good idea of whether or not the relationship will work.
When choosing a supplier, location is a big factor to consider. If you’re a local business who has built your brand on expertise in your area, then you’ll want to focus on finding a supplier who is located nearby, and shares your values.
On the other hand, if you’re looking to expand internationally, then you may wish to recruit a supplier that’s further afield. For example, if you’re a UK business looking to start operations in Denmark, it makes sense to partner with a Danish-based supplier; as they will be clued up on business rules and regulations, and can ship products easier.
Ultimately, finding a supplier is not a decision that’s to be taken lightly; and it can take time to find the right relationship. Check out more information on sourcing a new supplier.
If you need a place to start, our supplier management software will help you to keep on track of your current suppliers and evaluate their performance quickly and easily.