As a business owner, finding quality suppliers is essential. There is any number of suppliers you may ultimately need to work with, depending on your industry. For example, you might need electrical suppliers offering industrial-grade components, you could need a supplier of auto parts or components, or you might need retail suppliers.
Some of the particular types of suppliers include:
- Dropshippers: A dropshipping supplier maintains an inventory. Customers place orders with the retailer, giving those orders and shipping details to their dropshipping supplier. The dropshipper is responsible for getting the items directly to the customer.
- Wholesalers: A wholesaler buys items from manufacturers and usually does so in bulk for low prices. Wholesalers resell what they purchase from manufacturers to other businesses at a slight mark-up. If you have a retail business, you might work with a wholesale supplier.
- Manufacturers: These are companies making products from scratch that they then sell to wholesalers or retailers.
- Private labeling: Under this arrangement, a product is supplied by a company but then sold under the branding of another.
Regardless of the specifics of the products you’re sourcing, there are some general rules to follow to ensure you’re forming partnerships with reliable, high-quality suppliers.
Look At Your Relationship As a Partnership
We talked about this above—you are creating a partnership every time you work with a supplier, or at least you should be. Would you go into any partnership without doing your homework? Probably not, so why do it with your suppliers?
The wrong one can destroy your business, and the right one can help you build your success.
As a partnership, you have to approach suppliers with your own needs in mind of course, but also theirs. The best supplier relationships are mutually beneficial. Suppliers want clients who are going to be professional and fair with them and also communicate clearly.
When you first contact suppliers, you need to have a buyer’s mentality and be serious about it. Be concise with your questions and get to the point.
Suppliers are also more likely to want to work with long-term customers. When a supplier works with someone long-term, it provides them predictability in their income. If you feel like you’re going to be a solid long-term customer, let the supplier know.
Price Isn’t the Only Consideration
Yes, you will have to think about price as you look for suppliers, but this shouldn’t the only thing you’re considering. Otherwise, you could be missing out on an optimal relationship because all you thought about was getting the lowest price.
Also consider things like reliability, which may come from a bigger but more expensive company. Reliability is essential currently, with all the ongoing supply chain issues. A more prominent company may have the needed resources to have backup systems in place. Small suppliers simply might not be able to compete right now, but some can.
Another option is to split orders between two small firms. This gives you the benefit of working with a company that’ll pay more direct attention to you as a customer, but you can also minimize disruptions when you aren’t relying on a single supplier.
Something else to weigh is stability. Working with vendors who have a long reputation for doing business can be helpful.
Finally, as far as particular considerations outside of price alone, think about location. When you order from a supplier that’s geographically far away from you, it can take a long time for you to get your items, and you may pay more in freight charges.
Before you order, determine what the freight policies are.
Consider the Relationships You Already Have
If you’re currently working with suppliers but feel like something better could be out there, you might just need to tweak those existing relationships.
For example, see if you can work out discounts with your current suppliers. You may come from a stronger negotiating position if you can agree to buy more or give the supplier more favorable terms on their end.
Other Things to Assess
When you’re thinking about an entirely new relationship with a supplier, check their certifications. You should also be strategic about the manufacturing and shipping locations relative to your needs. For example, do you need a supplier with multiple locations?
You also want to find suppliers that really understand your product type and target market on a deep level.
Before you automatically go with overseas suppliers because they’re cheaper, you have to think about the current logistical issues and the geopolitical climate at any given time which could affect your supply chain.