Any small business retail owner will tell you that the success of his or her business depends a great deal on both the suppliers and vendors he/she chooses. A good supplier can bring a bounty of profits and happy customers, while a tough and inflexible supplier will provide a mountain of stress, worry, and woe.
What can a small business owner do to ensure that a supplier or vendor is the right one to provide the needed materials? Rather than picking a supplier or vendor haphazardly, you should do a thorough and pre-formulated rating and evaluation. It is critical to ensure that the supplier and vendor choices you make are capable of delivering what you need and when you need it, as well as meeting your requirements for quality and performance standards.
Popular Rating Metrics
While there could be an endless list of possible metrics on which you can make a supplier evaluation, even down to the dress code of the supplier’s employees, here are the most popular rating methods that businesses use to make sound supplier decisions.
Cost – The cost you pay to your supplier or vendor can make a big difference in your profit margin. If you have a supplier that is selling you wholesale items at a price per unit that is too close to your retail selling price, you end up making very little profit.
Talk to your supplier about purchasing in bulk to save money. Perhaps you can negotiate a contract where you promise to purchase solely through that supplier for reduced rates.
The same goes for your vendors. The items you don’t resell but use in your business are directly related to your profit margin. Carefully consider who you choose as your vendors. Even a choice in office supplies can save you hundreds, even thousands, of dollars a year.
And while cost is a major and important factor in choosing a supplier, it should not be the only deciding factor. Consider the following as part of your analysis as well.
Delivery Accuracy – Can your supplier deliver the right goods? How often do you find mistakes in the delivery process? Is the accuracy of your supply deliveries directly related to your manufacturing or assembly timeline? This can be a very important factor if you depend on accurate orders from your suppliers.
Delivery Timeliness – Will your supplier meet your needs on time? This is a question that should be raised. Suppliers will at times have stocking shortages and even flat tires on delivery trucks. But if your orders are constantly delayed or frequently late, consider using a different supplier.
Responsiveness – Does your supplier or vendor respond to your inquiries or concerns? When you need to make an order, are you able to get direct contact to your sales rep? Or if you have a concern about an order, will the supplier work with you to your satisfaction? This type of responsiveness can save a load of heartache that is no fault of your own.
Capability/Flexibility – Is your chosen supplier or vendor dependable to meet and accommodate your needs on a regular and long-term basis? How secure is the business? Have they been doing business for a long time and have a great reputation? Or is the supplier or distributor new to the industry and have yet to get a good review? Is the business at risk of suddenly closing down, putting you at a sudden loss of materials? Be sure you can depend on your suppliers and vendors to meet your needs.
Quality of Service – How are the people you deal with? Consider the service of the owner, your sales rep, your delivery drivers, and even the accounts receivable people you have to deal with. Are they people you enjoy dealing with? Or are they tough and brusque?
Take the time to evaluate your suppliers and vendors. Evaluate as much as you can before you choose a vendor or supplier. In many cases, you must actually use the vendor or supplier in order to make a sound evaluation. But the more you expect of your suppliers, the more profit you can make in your business.
