Are you facing problems in selecting the right suppliers? Reliable and trustworthy suppliers are basic requirement of every business. The decision-making process of selecting a supplier must involve the following stages:
Strategical Thinking: Strategical thinking is the first thing that you should do while selecting a supplier. This strategical thinking process must involve:
- Identification of business’s need- Identify the needs of your business and decide what you actually want from a supplier. A buyer always does a purchases to fulfill some of his company’s requirements. So list the needs and requirements of the purchase. For example, a buyer wants to improve the quality of products that he is offering to his customers. His motive is to improve the quality of the product and that’s why he wants a supplier who can provide better quality products.
- Avoiding dependency on a single supplier- Depending on one supplier can be dangerous for a company. A buyer should always have tie-ups with 2-3 suppliers .In case one supplier fails to make timely or up-to the expectation delivery or if some disputes occur with one supplier the buyer have a back-up for his requirements.
- Decide the number of suppliers your company needs: Carefully understand the requirement of your company and accordingly decide the number of suppliers you actually need. Having relations with only a limited number of supplier have many benefits. Limited number of suppliers allow you to maintain proper relations with each of them. Your business will be more crucial for them as you are one of their regular buyers.
Identify the Suppliers: It is better to shortlist the potential suppliers before making the actual selection. There are various sources from where we can get to know about the suppliers.Some of them are:
- Trade directories/B2B portals: Trade directories like yellow pages and B2B trade portals similar to tradeindia.com, provides a list of suppliers along with their contact details and user ratings.
- Trade exhibitions: Trade exhibitions facilitate the buyer to do face-to-face interaction with many suppliers and proper B2B communication takes place. So the buyer gets information about a number of supplier and then selects the potential suppliers.
- Recommendations: Recommendations given by friends or other buyers who had experienced the services of a particular supplier can be a great source of info for the buyer.
Making the final selection: After a buyer have shortlisted some suppliers through strategical thinking and identification process, the last step is to finally choose a supplier. Final selection can be done by:
- Getting a quotation: Request quotations from your shortlisted suppliers and then go through the prices. As pricing is one of the important prospective for a buyer, so first judge the suppliers on the base of their quotations. Though price is an important consideration but it should not compromise over the quality of the product.
- Comparing the potential suppliers: Compare the potential suppliers on the basis of their services, product quality, delivery time and experiences of earlier buyers.
- Negotiation of terms and conditions: Negotiate according to your requirements with the supplier and discuss all the terms related to price, time of delivery, discount, quality, payment terms, specification and features of products, warranty of defective good or services and other issues.
Credit report: Before signing the supplier agreement, it is better to collect all the information about the supplier. A credit report is a report that gives all the details related to the supplier like financial aspect, how long they have been doing business, name of the owner, registered office, capital, number of employes, products details, export details, trading terms, types of customers, etc. and helps you understand credibility of the company.
This process of selecting the supplier ensures that the supplier you have selected is the best supplier according to the needs of your company. You will get reliable suppliers with whom you can long term business relations. Proper selection of suppliers and collection of details ensures that you are dealing with the authentic suppliers.