5 Key Considerations
by Bruce Tannas
Choosing a supplier for your business is an important business decision. For many businesses such as retail, food service, and others their suppliers are their lifeline. Yet when deciding on which supplier to choose many businesses only look at price as their guide. That may be a mistake as key suppliers are more like business partners than just suppliers of convenience. So, whether you’re looking to find wholesale supplier or a manufacture of a product it is important to look at all the facets of what makes a good supplier before making a decision. This article discusses five key considerations when choosing a supplier for your business.
5 Key Considerations when choosing a supplier for your business
1) Picking the Right Size of Supplier
You need to consider the size and capability of the supplier to consistently deliver. While that may seem to favor larger suppliers, you also need to consider that your business needs to matter to them as much as they matter to you. If you order from a larger supplier and you’re only able to order a small amount, then your business likely won’t matter very much and the level of service you get will likely reflect that fact. Whereas those same orders might be more important for a smaller supplier and likely your business will be more valued. The key is to find the right size of supplier that can deliver, give you the service you need, and value your business as a customer.
2) Supplier’s Policies
The supplier’s policies on payment terms and return policies can help or hinder a relationship with a supplier.
- Terms: Financing terms are important, particularly for retailers, as they can be a significant means of financing inventory. Make sure to evaluate the terms are available and compare those terms to other suppliers.
- Return policies: Understanding return policies can help you choose a supplier. Choosing a supplier will take back unsold inventory vs. another that won’t, might save you discounting the merchandise and taking a loss on that inventory.
3) Marketing and Brand Reputation
Not all suppliers are created equally when it comes to the quality, brand(s) of products, and marketing programs.
- Quality: Picking the supplier or manufacturer that supply the quality of product or service needed for the price point that you need for your business is important. But even a with a quality manufacturer or supplier issues can arise. So according to an article by InTouch, a manufacturing quality inspection company, its important that “a supplier has accountability” and “that will take responsibility for quality problems and work forward to address it quickly.”
- Brand: The brand reputation of the product or service may be a factor for certain items as well. In that case, evaluating the brand trends become important and understanding the company’s plans to keep the brand relevant to the market need to be a consideration.
- Market intelligence: A good supplier may be able to give you market intelligence about customer trends, competitors, and the market in general. Having access to this information can help you be more successful and therefore should be part of the consideration.
- Coop marketing programs: Some manufacturers may offer marketing dollars to promote their products and if they do you should look at their program and evaluate it vs. their competition.
4) Supply Chain
If these last few years have taught us anything its that supply chains can be fragile. This makes it important to consider how the supplier fits into your supply chain. In many cases a shorter supply chain may be preferred. So, the distance the is supplier from you and the robustness of the delivery system should also become a factor.
Given supply chains can have disruptions, emergencies, and otherwise be fragile it is also worth considering having a main supplier(s) and an alternate supplier(s) for key supplies and inventory.
5) Choosing Suppliers that Can Become Valuable Business Partners
While price is always an important consideration as is the margin on wholesale goods, but there is more to choosing suppliers than just price. Thinking of your suppliers as potentially valuable business partners can help when looking for a supplier. This gets you beyond just the price of individual items and thinking of the entire package that the supplier brings to the table. When a supplier aligns with your business, they become more interested in your long-term success. According to an article by Jay Steinfeld, founder and CEO of Blinds.com, when “partnerships are better aligned” it opens the door “on everything from providing customer insight and additional tools and processes, to developing unique promotions and volume incentives.”
Choosing a supplier for your business can be a more involved process than it might seem at first glance but taking the time to look at all the key factors may help you find a better supplier overall.
Connect4Commerce offers entrepreneurs and small business owners across the country a convenient and comprehensive place to connect, exchange goods and services, and advance their businesses. Be sure to check out further articles in our Small Business News blog for additional resources. Also, find suppliers and wholesalers on our site that can help you grow your business.