Let me ask you a few questions…
What would it be like if you knew that you could call a supplier knowing that you’re going to get a prompt reply?
What if you were able to be confident that you were consistently receiving the best pricing?
How much better would things be if you knew that your suppliers were there to support you in achieving your company’s goals?
I bet it’d be a huge relief, wouldn’t it?
Of course it would. It’s something every Procurement professional would benefit from. That’s why it’s important to make sure that you’re choosing the right suppliers to work with.
Why Does it Matter?
Are you completely content with the relationships you have with your suppliers? Or does the prospect of dealing with your suppliers feel like a huge chore?
Whether you’re looking to consolidate your vendors, or just make a small change, it’s important that you make sure that the suppliers you’re working with are the right ones. When you have the right relationships your company benefits in several ways.
Here are a few:
- Saving money.
- Getting better service.
- Achieving company goals.
- Avoiding legal issues.
Taking the time to assess the quality of your supplier relationships can make your life a lot easier. It can also save tons of money for your company.
The Key Is Total Cost of Ownership
As a Procurement professional, you already know how important it is to minimize total cost of ownership when you’re purchasing products and services. It’s no different when you’re selecting a vendor.
When you’re choosing who to work with, you need to determine how much each supplier relationship will cost. Of course, this doesn’t relate only to the up-front costs of what you’re purchasing. There are other factors involved. This post will provide some helpful tips to help you make sure you’re choosing the right suppliers.
Performance is one of the most important factors in deciding whether or not to partner with a particular vendor. You need to know that the supplier you’re working with will be able to provide the level of service your company
There are several different factors that can determine the level of a supplier’s performance. The factors that are most important will be determined by the industry you’re in, and the type of materials you need to purchase.
Here are some factors to consider when evaluating vendor performance:
- How much effort does the vendor put into understanding your business and your needs?
- How does the vendor maintain consistency of service?
- How knowledgeable is the vendor in your industry?
- How does this vendor make you more competitive in your market?
While this list isn’t exhaustive, they are some of the most important points to take into account when deciding which vendors to use.
Make Sure you Know the Requirements
One of the most important factors involved in selecting a vendor is understanding what the vendor’s requirements and expectations are. You’re going to want to make sure you know what’s in your supplier agreement. This will give you an idea as to what to expect in terms of service, pricing, compliance, etc.
There are two main reasons why this is important:
- You need to make sure the contract is favorable to your company’s needs.
- You want to make sure that you know how to stay in compliance with the agreement.
When choosing a supplier, it’s essential that you know what they expect from you as a buyer. If their requirements are too steep, you may want to consider looking at another supplier.
Potential for a Relationship
When choosing a supplier, you don’t want to focus only on products and price. You need to also assess the likelihood of a positive working relationship. If you’re going to work with a particular supplier, you need to be able to treat them as a partner, not just a company you buy from.
Communication and Accessibility
One of the factors you should consider is communication and accessibility. You need to know that when you call, you’ll get an answer within a reasonable amount of time.
You have to do what you can to make sure your supplier is responsive. The last thing you want is to have a mishap occur because of a lack of communication.
The other important component of a supplier relationship is collaboration. As stated before, you want to see your supplier as a partner. The arrangement between you and your supplier should be one that helps you both achieve your goals.
This means that your supplier should be willing to work with you to solve problems that are related to the supplier’s area of expertise. They should be focused on helping you obtain the solutions you need not just selling a product.
Get to know them Beforehand
Before choosing to work, or continue working with a supplier, you should know as much as you can about how they operate. You want to get to know them on a deeper level if possible. It might require you to take some additional steps, but it could help you ensure that you’re choosing the right supplier.
If you can, meet face to face with them at their facility. Get a feel for how they function. Sometimes, it helps to get a closer look out how a potential supplier operates. It will give you a better idea as to the level of service you can expect.
Your prospective suppliers should be willing to allow you to see how they do business. If they’re running a quality operation, they will know that when you see them in action, you will be more comfortable working with them.
The Evaluation Should be Ongoing
While you need to make sure that a supplier is right for your company before doing business with them, it doesn’t stop there. You should also continue to re-evaluate the relationship as it progresses. As a matter of fact, when you start to do business with a supplier, you’re able to see firsthand how they will treat your company.
The objective is to make sure that they continue to give you the same level of service as your relationship progresses. Also, it’s important to make sure that your supplier is still offering competitive rates. There’s nothing wrong with checking other suppliers every now and then just to make sure that you are still getting the best rates.
How’s Their Reputation?
This might go without saying, but you need to know how your potential vendors are viewed by everyone else. Before considering a relationship with a supplier, you should find out as much about them as you can.
Are they reputable? Do they deliver on their promises? Have there been many complaints about their level of service?
You also want to make sure that the supplier is on the up-and-up. You don’t want to risk doing business with a company that is known for unsavory business practices.
Are They Stable?
Financial stability is crucial. You need to know that the supplier you’re dealing with is not going to disappear suddenly, leaving you hanging. It’s happened to many a Procurement professional.
When you’re doing your research on your potential suppliers find out as much as you can about how well they’re doing financially. This will help you avoid a difficult situation later on.
Procurement is challenging enough. Choosing the right suppliers can go a long way towards making your life easier. The better relationship you have with your suppliers, the more effective your Procurement team will be.