Your suppliers are essentially an extension of your business and so as a small business owner, you need to think hard and carefully around supplier partnerships. While cost is always a factor it is so much more than choosing the fastest and cheapest vendors. So, here are the most important questions you need to be asking yourself when it comes to selecting a supplier.
1. What are my key selection criteria?
Ask yourself, what are the important factors when searching for a supplier. Now cross-check your supplier options against this list, namely:
- Products required
- Quantity
- Produce quality
- Current and future product availability
- Delivery times
- Price
- Product labels
2. Should I go international or local?
There is no right answer here, and both these options will have both pros and cons. So the answer really comes down to your customer base and what you are offering. It’s widely known that imports from major manufacturing markets like China will almost always be cheaper. This is because these suppliers are often in a position to carry more inventory so they can ship the product faster. That said it can still take weeks to arrive once shipped. For drop shipping businesses, where you don’t physically hold inventory but you want to offer a lot of options for your customers, this is often the preferred option.
Domestic suppliers can also be a great option for small business owners. This can allow you to develop a closer working relationship with them, check out their factory and operations, cross reference them, run a labour standard verification, and negotiate pricing face-to-face. Local shipping can also mean faster turnaround times in the grand scheme of things. Not to mention the important factor of investing in your local community and market. Some small businesses use the fact that they are supporting local businesses as a marketing anlge which can earn points and loyalty with your customer base.
3. Does the suppler fit with my company values?
You may not think about this one: What if your supplier is sourcing products unethically? This then gets passed down to you and as part of the supply chain you will find yourself in tricky waters. So it’s really important to ensure that your suppliers hold the same values as you. This can be checked by doing your homework on their background and asking some hard questions.
4. How is their customer service?
In the same way you need to offer high quality service to your customer base, it is equally important that you receive the same from your suppliers. Consider your initial experience with them: Did you receive timely, friendly, consistent and diligent service? If not, get out while you still can.
5. Have I compared carefully?
Once you have received a quote, weigh this up in relation to your core needs. For example their location may not be as important as their diverse product base. While price is always important, low costs can sometimes mean poor quality. Not always of course, but it’s definitely worth investigating. It is always a good idea to check how your supplier receives their goods because it can happen that they themselves receive goods from a third party. Meaning that third party is now part of your supply chain too and you need to understand if you are happy with the arrangement.
6. Were they highly recommended?
While this is not always an option, if you can, ask friends and business acquaintances what they think of this supplier. You're more likely to get an honest assessment of a business' strengths and weaknesses from someone who has already used its services.
The bottom line
Your supplier is a hidden albeit essential part of your business. Shortcuts and price skimming are not going to help you in the long run. So make sure you have done your homework and are comfortable with them end-to-end. By asking yourself these tough but essential questions, you are likely to make more sound decisions when it comes to building up your own essential supply chain.
