Every company should have expectations that their suppliers will be honest, socially conscious, lawful and proceed with strong safety measures.
Firstly, suppliers should strive to minimize the total cost of their products and services, so your company can offer the greatest value to your customers. Remember value is not just about product cost so make sure you evaluate the other costs of the relationship. Additionally, suppliers should be able to provide a stable supply stream and respond quickly to any problems or inquiries that may arise. Suppliers that can support your company’s local, regional and global efforts are best. And finally, a work environment where suppliers keep the health and safety of customers and employees in mind is critical.
If you are presented with list of a few hundred potential suppliers, begin your evaluation by narrowing that list down to five suppliers at most. Make an effort to keep the key factors mentioned above in mind. Next, contact each of these suppliers and perform a set of checks you see are important. The feedback you get from this interview should help you to further narrow your potential list of suppliers from five to two or three, having done so by considering both the pricing and non-price factors.
After narrowing your list, confirm the legitimacy of those two or three suppliers. You should verify:
- that the supplier has loyal customers. All the certificates and promises in the world mean nothing if the supplier cannot give you satisfied clients for you to contact!
- that the supplier has a strong control system and that they have quality experience in production so they’re able to supply your company with what they say they will.
- that the supplier is financially stable and has a good reputation. Professional service providers are available for your company to use in order to conduct these verification factors at relatively reasonable prices. Professional services are great if your company does not have the resources in place in-house that are necessary to assess suppliers.
Lastly, negotiate pricing and then move into the actual production process.
Once you have chosen the appropriate supplier, begin to establish an on-going relationship. Perhaps you can consider not requiring advanced payments once you have a strong business relationship set-up with a supplier, or be open to renegotiating conditions down the road if there is fair reason to do so with your chosen supplier.