Managing relationships with customers and prospects represent two top priorities in growing your business, but there are other significant relationships that are vital to your success – and that’s your connections with suppliers and vendors. Without them, you won’t have access to the raw materials, components, and other supplies that are essential to operate your business.
Although many business owners shop for suppliers based on price alone, that approach does not consider other factors that could impact overall expenses. For example, reliability, quality, and level of service will all factor into your total costs. If you can’t rely on your vendor, you could face losing orders from customers or risk losing those customers altogether to a competitor. That could cost you far more than you save from lower prices on supplies.
As your business grows, vendor relationships become even more important – helping you not only meet your needs today, but those in the future.
Criteria for Evaluating Candidates
Some criteria for evaluating potential vendors include industry history, financial position, and the service and support you can expect towards maintaining your operations. Yet selecting vendors isn’t always an easy process because there may be many to choose from.
To begin narrowing your list of potential candidates, you can consult your trade association for possible leads, refer to industry trade magazines, ask others in similar industries for recommendations, or attend trade shows where suppliers are often exhibitors.
Before interviewing and evaluating potential vendors, you should create a document that represents a complete requirements list. This list should include the specific goods you’ll need, appropriate quality level, and shipping time. Be as specific as you can so potential vendors can accurately evaluate your needs.
Interviewing and Evaluating
Once you have a list of potential suppliers, you can begin interviewing potential vendors to narrow down candidates. With your requirements document, potential vendors should have enough information to provide quotes on price, quality, and a delivery schedule.
Price, of course, can be subject to negotiation, but pricing will largely be based on the supply and demand for the material or service you need. Before signing a contract, be sure to ask for references, and call them to learn about any potential issues that may concern you. Not checking out a vendor’s past performance can be costly.
It’s also a good idea to identify not just one vendor but a few alternatives you can rely on should your main supplier fail to meet your needs. Placing small orders with these other vendors would keep you in touch with them should you need their services. Avoid selecting too many suppliers, but you definitely want to identify more than just one vendor that can meet your needs.