If you run a business – whether a small sole-proprietor affair, a big corporation with many employees, or something in the middle – you have to buy stuff, sometimes lots of stuff. You have to have operating supplies, building/manufacturing materials, promotional items, and/or inventory . . . at the least. Even someone with absurdly low business overhead like, say, a freelance writer still has to have, at a minimum, an Internet provider, website-hosting service, computer and printer, and paper and printer ink, as well as someone to supply those services and materials.
you rely on chosen vendors and suppliers for those business needs.
But if you don't choose wisely, you don't make money the way you
should. You spend way too much time (which is indeed money for
business owners) putting out customer/client fires, chasing down
orders, and scrambling to have what you need to do business. Let's
see, then, how to choose the right vendors and suppliers in order to
make more money the easy way . . . by ensuring that end of your
business runs Teflon smooth.
Your Business Partner Must Have
no mistake about this: a supplier or vendor is a business partner, not
just some distant person or business that provides some stuff you
need. And you know that your business partners absolutely must
possess certain qualities and attributes, such as:
Your suppliers may not really have the same goals as you (except to make money and realize a profit), but they must be willing to work as if they do. "In order to be clear about how you'll work together, it's important to choose a collaborative partner." And that may even mean "a partner that visits often to learn about you, what's important to you and how you run your business" (Entrepreneur).
Some suppliers and vendors you'll have around only for a short while because you need them only to meet specific short-term needs. The rest, though, should be in it for the long haul, should be ready for a long-term commitment. For the longer you know someone, the better you know them and the better you can work together. A business partnership, like any other relationship, thrives only when there is a solid commitment on both sides.
Alignment and commitment can really flourish only in an environment of honesty and integrity. "Be careful of potential partners that over promise. No one can give you everything under the sum. Make sure you feel like you're being told exactly what they can – and can't – provide and that they're adequately and truthfully representing their skills. Companies that are honest about their capabilities and potential shortcomings are ulimately a better fit than those that promise you the moon but cannot deliver" (Entrepreneur).
Your suppliers and vendors also have to know exactly what they are doing on their end. Your partners should be able to bring plenty of experience, broad and deep knowledge, and demonstrated skills to the table. They must be people and businesses you believe in and can trust to deliver. And this means you will need clearly defined selection criteria and a thought-out selection process.
Criteria and Process
do you need to think about your selection criteria and have a solid
process in place? Because choosing the right suppliers is a critical
component in your business – one that ensures you can deliver your
products/services on time, at the right price, and in line with your
quality standards . . . and ultimately make more money.
An exhaustive list compiled well ahead of time is the way to proceed here. This list that will allow you carefully evaluate potential suppliers should include (at a minimum):
Lead time from receipt of order to final delivery
Minimum/maximum order quantities
Payment terms and conditions
Contactable references (adapted from business.org)
The first step here is to identify the methods you'll use to find potential suitable suppliers. That could mean, for example, advertising in trade publications and/or approaching likely companies directly. "Allocate a time frame for conducting your suppliers selection process. Appoint qualified members of your team to review the proposals and recommend a short list of suppliers to choose from" (business.org).
Out Call for Bids
After compiling a short list of suppliers, the next step is to put out a call for bids, possibly a Request for Proposal (RFP) or a Request for Quotation (RFQ) under formal conditions. However you go about it, just make sure you include all the pertinent details about products/services needed, as well as probable quantities, delivery dates, expected fulfillment and turnaround times, and quality standards. You will also want bidders to respond with respect to all these details, as well as providing some information about their sources of raw materials and their providers.
Once bid submissions start coming in, you will need to carefully evaluate each and every one of them, checking them against the list of selection criteria you compiled at the outset. Determine the importance of each criterion and "score all submissions against this for an objective method of evaluation. Identify what the agreement or contract period with each potential supplier comprises to ensure you aren't drawn into a situation that could be damaging to your business" (business.org).
And remember the selection process isn't over once the initial selections have been made. You will still have to monitor supplier performance for a time to make sure they in fact can and will do what they promised and that the products/services continue to meet your needs. Keep in mind as well that mistakes and slip-ups happen, so what you want to monitor are trends and patterns, not one-time occurrences.
Supplier/Vendor Selection Tasks
the broader overview of the requisite supplier/vendor qualities and
attributes and of the selection process. So now here are some specific
tasks and best practices for selecting the right suppliers:
Nothing beats word-of-mouth recommendations from people who have first-hand experience. So find out about demonstrated capabilities and proven track records through third-party referrals. Find out if a prospective supplier has worked with other companies in your industry and contact them. And don't forget to check out reputations at the standard third-party review sites.
Also, take the time to interview and get acquainted with several members of a supplier's team. "Often there may initially be one point of contact when you're negotiating a potential partnership, but you may want to ask who else on their team will be involved in executing the game plan you've put together" (Forbes). And when it's feasible, take the time to visit the supplier's office or headquarters, either in person or virtually.
the Agreement Carefully
The devil's in the details, and relationship's often in the fine print. So you absolutely must ready through the supplier/vendor agreement carefully and thoroughly. If you find anything that doesn't align with your business model, renegotiate terms immediately. The elements to pay particular attention to are:
- Parameters of working relationships
- Expected and promised results
- Terms for ending the relationship (if necessary)
Service Trumps All
though, if a supplier or vendor can provide the products or services
you need in the right quantity and quality and on time, then
everything else takes a back seat to customer service. Superior
customer service – that willingness to quietly go the extra mile
simply as a matter of course – trumps pretty much everything else.
Here, then are a couple of illustrative examples:
Claus's Bandana Source
patients undergoing chemotherapy treatments usually lose their hair.
The chemotherapy drugs specifically target and suppress rapidly
dividing cells like cancer cells. But the problem is that these drugs
also attack other cells that divide rapidly, such as hair follicle
cells, because the drugs indiscriminately affect both normal cells
and cancer cells. As a result, many people receiving chemo lose most
or all of the hair on their heads (a condition known as alopecia).
And for young people that can be both disturbing and traumatic.
To cope with this condition, many patients resort to wearing a hat or head covering of some sort. The younger patients often
something like a bandana for their head covering. And Bandana
Claus, Bruce Kujaski, accommodates them giving out bandanas at
Christmas, as part of Daniel Project, in Costa Rica.
asked where he purchases the bandanas, Bruce didn't hesitate to say,
of course." And he was quick to add that he is particularly
pleased with Wholesale For Everyone's fast delivery and now gets all
his bandanas there. It took Bruce a while, though, before he hooked
up with this bandana supplier.
the beginning, Bruce's sisters helped him by purchasing bandanas from
various local stores. But the sizes varied too much and the colors
were too drab. So Bruce started looking around online for a supplier
from whom he could buy bandanas in volume and in loud colors and
eye-catching patterns that would appeal to the teenagers. At length,
he stumbled on Wholesale For Everyone and was impressed with the
"extraordinary variety and the discount offered on large
Bruce gets all his bandanas from Wholesale For Everyone. One of the
main reasons is that they carry the loud colors and designs that
really appeal to the young cancer patients, such as the tie
and the star
The other reason is the superior service. For example, a recent order
was shorted because the manufacturer didn't have enough product to
fill the order. So Dan Weaver, owner of Wholesale For Everyone,
called around to his competitors to find what Bruce needed. The
competitors didn't have them either, so Dan made up the difference
with some of his religious
which were a huge hit.
Gautreax and the Mardi Gras Penalty Flags
after that infamous
January 20 NFC
Championship Game, when the yellow flag did not fly for
pass interference and the Saints lost the game to the Rams as well as
a bid for the Super Bowl, Mardi Gras float designer Sean
had an idea.
He came up with the perfect way to laugh in the face of that football
tragedy, to give it an ironic twist and wring out a little humor. And
that was a Mardi Gras throw that would mimic the penalty flag
never thrown in the game.
Sean went to work. After
finding local fabric stores an unreliable source for the needed
materials, Sean did like all of us and went online. He conducted a
Google search for "yellow
At the top of the search results was Wholesale For Everyone, as well
a likely looking competitor on the first page. After doing a quick
comparison, Sean found that Wholesale For Everyone (WFE) was more
professional and had the competitive prices he needed and so the
competitor was ruled out.
the process Sean used to select Wholesale
as his supplier for the raw materials for Mardi Gras penalty flag
competition's site was either antiquated or non-professional or both.
WFE had at the top of their page the 1-800 number and seemed welcome
to phone calls. The competitor's site mentioned that ordering calls
were not welcome and the number was only for customer service after
the order was placed. So, if I ordered from the competitor, would the
shipment get lost in the mail or be late? I needed these flags made
there's more: "I called up WFE and spoke to Jeff. Boom, order
placed, and I had the flag material in days. They even waved the
shipping cost. I placed another order. Boom, I had that order in a
few days as well. Yesterday morning, I placed an order for 640
pieces. An hour later, I called back to revise the order and add 60
pieces to it. No problem. The pieces were out the door yesterday, in
the mail at a very reasonable standard shipping cost, and will be at
my door tomorrow, 2 days later."
and accuracy were paramount. "Mardi Gras is March 5th,
and the riders need to get their flags in time to decorate them with
time to spare. WFE
Why would I order from anyone else?"