Whatever industry your business exists in, and no matter how large or small it is, your suppliers and vendors are going to have a major role to play in your overall success. With this in mind, it’s absolutely essential that you have an established system in place to ensure a smooth and profitable supply chain. Here are some essential pointers for your supplier evaluation…
Establish Who’s Calling the Shots
The criteria you use for evaluating your suppliers and vendors will vary from company to company, but every business needs to have a certain person or team of people for reviewing all the data you have at your disposal. It’s generally a good idea to assign different people depending on how important these suppliers are to your operation. For instance, when it comes to the most important suppliers, you may need your CFO or someone else in your finance department on the job, along with people from purchasing, operations, IT or engineering depending on the product or service you deal with. With less important suppliers, the work can be left with your purchasing and procurement officers with relative safety. Through the entire chain, the people who should also be involved are your end users. Actively look for feedback on your product, and plan to trace any issues back to the supplier.
Maintain Close Relationships
You should be thinking about your suppliers and vendors as part of the business, and treat them as such. Be sure to communicate openly, and often. If you hear a certain supplier is the leading brand for industrial LED lights, and it’s possible to deal with them entirely through email and chat windows, it may be tempting to stick to these simpler platforms. However, the personal touch of a conversation over the phone or in person can go a very long way. Most importantly, clear, regular communication is essential to avoiding any kind of conflict or misunderstanding with your suppliers and vendors. When you’re upfront and transparent with the people you buy from and make sure that they understand your specific needs and expectations, you’ll leave very little room for error.
Know When to Issue a Red Flag
As you keep tabs on your supplier’s performance, you have to know when to praise them for their work, and when to issue red flags. Communicate your appreciation for a job well done, or even give them some extra business if it’s practical. By the same token, you should have a system in place for communicating any issues you have with the service they’re providing. Sure, you can drop a supplier for their poor performance, but strategically speaking, it’s much better to retain poor performers and try to better them, rather than looking for new companies all too often. Retain data such as on-time delivery rates, return rates, and corrective actions, and you’ll be able to assess the relative value of keeping a supplier on board, despite their faults.
As you push your business towards further growth and expansion, keep these three pointers in mind for effective supplier assessment.