No matter what type of business you have, its reputation depends on more than just your internal processes. Selecting the right suppliers to do business with doesn’t just make your life easier, it also boosts your reputation. So, when reliablecouriers.com delivers those important legal documents on time, or your office cleaning company leaves things looking fresh,you’re the one who ends up looking smart. That’s just part of the reason why choosing suppliers is an important strategic decision. Here’s what you need to take into account.
Price
On the face of it, price is the most important factor when choosing suppliers. Lower prices means more profit for you or a lower price you can pass on to your customers. But it’s by no means the only criterion you should use when choosing suppliers. In fact, you might end up deciding to pay a higher price in return for other advantages. Let’s look at those next.
Consistency and Reliability
Knowing what to expect when you do business with your suppliers is hugely important. Uniformity in the quality and service your suppliers offer helps you to keep the wheels of your business turning smoothly. In short, you should be leaving nothing up to chance when you place an order. Talk to industry insiders to find out whether you can expect your prospective suppliers to work consistently and reliably.
Payment Terms
In manufacturing, it’s quite common to have peak production periods during which your business spends more on inputs and sells fewer finished products. The cashflow pinch can be a trifle uncomfortable, so finding suppliers who are willing to defer payment can be a big help.
Alternatively, you might be interested in the offer of a settlement discount in return for prompt payment or better prices in exchange for a greater volume of orders. Be sure to ask about any adjustments to standard payment terms you might want to negotiate.
Lead Times
Depending on what and how much you’re likely to order from suppliers, you may find that they need time to get your orders together. Even when you’re ordering volumes they’d ordinarily have in stock, you may have to fit in with the time it takes to prepare and deliver the inputs you need.
When lead times are long, consider the likelihood of needing a rush order and whether you will be able to find items that match your specifications elsewhere if need be. When lead times are long, you’ll need to keep more inventory, and that has costs you should factor in when comparing prices.
Stability
Choosing a young business as one of your suppliers can be risky. Even if you’re happy with their services, they may not have the stability you need from suppliers. Are they in it for the long run? Will their pricing structures remain consistent? You may need to ask some probing questions about their financial security and forward planning before committing to a relationship.
Always have a Backup Plan
Even the best suppliers can fail you for one reason or another. While your carefully considered choice of suppliers will help to minimize the risk of this happening it’s always wise to have a backup plan.
You’ll be doing a lot of homework on potential suppliers, be sure to save the information for future reference highlighting possible contingency suppliers in case you need to fall back on them. Remember: your business is only as good as its supply chain. Don’t get caught napping!
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