One of the most essential aspects of setting up a business is ensuring you have a reliable supply of products and services to keep the business running. But here’s the situation. Getting suppliers is not the problem. The challenge is in getting the right ones that complement your business objectives.
How do you know that this is the right one? Let’s start with the basics…
Who is a supplier?
A supplier sells products and services to another company. A business is consistent when it has a good relationship with its suppliers.
Muli is a manager at a local supermarket. Every weekend there are many lorries bearing different products. The products are offloaded and put on display at the supermarket for customers to purchase.
The supermarket is in business due to the many suppliers that have provided their products for sale on their shelves. Every month, Muli checks on the products sold and pays an agreed amount to the suppliers. The remaining profit goes to the supermarket.
The supermarket will operate as long as the suppliers provide their products for sale.
Factors to consider when choosing a supplier
Here are seven key factors to look out for:
- Similar values– When the values are similar, a long term relationship is developed.
- Experience in the industry– A supplier who has experience will always add value to your business. They have resources to provide the products or services on time.
- Flexibility– The supplier is adaptable to changes when challenges arise.
- Quality– The quality of products and services being provided fit to the standards of the business.
- Cost– The cost offered is within the budget of your business.
- Service delivery commitment– This agreement should be done between the supplier and the business. This ensures availability of the products and services always.
- Reputation- A business may feel comfortable dealing with a supplier who is highly recommended as they will provide the products on time and in good quality.
There are minor factors that may be considered here such as the location of the supplier. This reduces transportation costs. Another factor is the nature of your products and services. Perishable products and services will require a supplier who takes up orders and delivers fast.
Why is a supplier important to your business?
- Consistent supply of products and services to the business.
- A good relationship between a supplier and the business encourages low cost of products. This provides a competitive field for the business as the products may be priced differently from their competitors.
- The supplier provides the products and services needed to run the business.
- A supplier who offers products and services of high quality results to customer satisfaction which is good for the business. This will increase the customer base and customer retention.
It is advisable to create a relationship with many suppliers. This reduces risks such as lack of delivery of products by a supplier on time. There is a need to have relationships with other suppliers.
Good relationships between suppliers and businesses can be built through regular communication, give customer feedback.
Sources: YoungMogul, hbr, oxfordcollegeofprocurementandsupply, bbc, business