Suppliers and service providers can make your business successful or fail. The source of your inputs can determine whether you get to be a market leader in your sector or not. If you have the right supplier at the right quantity, for the right quality and price you are able to pass the same to your clients. Depending on your industry, and the importance of what they supply in your business, your priority should be to get the supplier, offering the best quality, at the right price, that is nearest you. Some of the things you want to look for in a supplier are:
a) Location
The cost of a product is not just determined by the price quoted by the supplier, you will need to add to the transportation cost. A supplier that is near you will keep the overall costs down.
This is more important for your major suppliers whose supplies compose the majority of your product. it may not matter much if the input to your end product/service is insignificant.
In the situation that they do the delivery at no extra cost, you still have to consider whether transportation affects the quality of your end product.e.g. if it will affect the freshness of the supplies. A restaurant is better off sourcing for local suppliers in the community than having goods shipped from far even if the products are cheaper.
b) Pricing
There needs to be a balance between the price and quality of suppliers. For many entrepreneurs for the core most important products, the cost is a very important factor. However, if this compromises quality then they are willing to pay a little more to get the right quality. For supplies that compose a small percentage of production input, the cost may not be a key issue especially if it adds value to the end product quality.
c) Payment terms
The ability to get good credit terms from your supplier will be important and enable you to bootstrap your company. Suppliers ask for cash on delivery (COD) until you have established a relationship with them. However, if your order is significant for their portfolio or you have good referrals you may be able to negotiate some credit terms.
d) Understanding your industry
A supplier who understands your industry makes a good partner. Establishing a good relationship with them can help you get insights into the industry you may not have. You will also not need to educate them on what your needs are. You especially need to consider this if the product supplied is used in several industries and yours is not their core market.
e) Duration In Business
A supplier who has been in business for a long time will have perfected their systems and have the capacity to supply higher volumes than newer suppliers. They will have established cost-cutting systems without compromising on quality.
f) Ability To Meet Your Unique Requirements
If you have an innovative product and want a supplier who is able to meet your unique requirements according to your specifications, you will need to engage closely with different suppliers and probably pay for prototypes before you can settle on a specific supplier.
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