There is no doubt in saying that suppliers are one of the most important parts of any business. All the raw materials that are required to make the finished product you sell are provided by suppliers and without suppliers, it will become hard to grow your business. Every business requires many services and supplies, as a part of common overhead. These supplies include paper clips, internet connections, etc. Though both the terms (supplier and vendor) are used similarly here, their job is much more than just supplying you with the items and services that are required to run your business.
They are also very useful in other things like providing information, can help you analyze a new product’s potential, track the other competitors. You can also make vendors your partners to cut extra costs and product designing. It is also very important to choose good suppliers and vendors to grow your business.
Vendors and Suppliers Evaluation
There are four categories of suppliers:
1- Manufacturers- Most retailers purchase the items from independent representatives or via salespeople of the company and the prices offered from these are low.
2- Distributors- They purchase the product or good from different manufacturers and they sell their goods to different retailers. That’s why they are also referred to as brokers or wholesalers.
3- Independent Craftspeople- These people sell unique products exclusively at trade shows.
4- Import Sources- Most retailers also purchase foreign products. It can be purchased through a domestic important or by going abroad on their own.
Good Supplier Qualities
Most growing companies only focus on the price provided by their suppliers. Though when you are on the growing phase, price is important but don’t do too much because the suppliers are also in the business to generate profits. If you constantly try to cut prices on every invoice, then they will stop doing business with you.
Reliability is the second thing that comes after the price. You should always try to find reliable suppliers because they will give you good services and you will all get the products as per the deal and the chances of receiving damaged products become less. You can go with large suppliers as they take more responsibility and provide good back up. Though it doesn’t mean that small suppliers are not good. If you are a large customer and doing business with a small company then you will get more attention in comparison to a larger company.
Stability is also a major factor that you should keep in mind. You should always do business with a company that has been in the business for a long time and has a reputation among customers. You can also learn from your own experience, for example- if you are receiving a product before the planned date, then there are chances that the vendor does not have enough orders.
So the last factor that everyone needs to consider is the location. The time that a supplier will take to deliver your products depends on the location. Distant suppliers take more time and because of the distance, freight charges also increase. You will also face problems with the distant supplier when need products to be delivered fast. Though if you order more quantity, then you might get free shipping but it is better to find suppliers that are closer to your home.
Supply Relationships Change
If you want to get better deals, then you don’t need to need to change the supplier. You can also request your supplier to improve their services and provide discounts on the products. Though it is not that easy and you won’t get it just by asking. Here are some bargaining methods that you can use:
1- Getting Discounts- Business to business commerce is not similar to normal business. In a normal business, you go to a store and purchase a product and pay the same price as other people do but in B2B commerce, it is not like that. In B2B business the discounts depend on many factors like the number of products, the relationship time frame between the supplier and the customer, etc. Though you can ask the supplier about the discounts and what are the ways to earn them.
2- Service Improving- No business person wants to make their customers upset and every businessperson tries their best to provide quality services. If you are facing service issues with your supplier, then there are chances that he doesn’t even know what is going on because it is practically impossible for anyone to know the workflow of every work development. Though if you are not getting good services, you should keep contacting the higher management until someone considers the issue.
3- Good Relations With Suppliers- Building good relationships is important to work with suppliers properly because there are a lot of benefits of having good relations with suppliers. If your suppliers are not offering you discounts and improving quality that doesn’t mean they don’t want to build a connection with you, it’s only because most customers don’t want to befriend suppliers. If you want to build good relations, then let them know.
It is always to better to work with fewer vendors to avoid extra administrative costs. Having good relationships with fewer vendors helps in increasing the efficiency of the business. Here are some points that will help to decide when you should leave a vendor.
1- Unreliability- Having reliable vendors are important for any business to grow. So if you notice that you are receiving the shipments late or the vendor is constantly making up excuses for late deliveries, then it is time to switch the vendor.
2- No Cost Competitiveness- No one can predict the market with full accuracy and the prices fluctuate time to time, so if the other vendors are providing the same goods as your vendors at a low cost, then you must talk to your vendor about it. If you feel that he doesn’t have any point, then you should contact other vendors.
3- Insularity- Trust is the foundation of any business and vendors that provide full transparency about their financial conditions, workplace, employees and other things are the vendors that everyone should choose. It also helps in analyzing whether the vendor is worthy or not.
4- Extra-Sale Costs- Everyone must check everything from the quantity of the goods to the quality before making a supplier permanent. You also have to train your workers to give the best output. Though some costs cannot be avoided but if you notice the cost going too high, you should check and compare other suppliers.
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