Because it has a direct relationship with the profitability and image of businesses, the topic of supplier selection must be seen as being of extreme importance for organizations.
In the animation Finding Nemo, the character Nemo asks Dory:
— How do you know nothing bad will happen?
And Dory answers:
- I don't know.
If Dory were a buyer and Nemo's question was related to suppliers, it would mean that Dory's company is at serious risk of financial loss.
A purchasing department that selects good suppliers drives business growth, increases the chances of innovation and improves its profitability and profitability.
Without selecting the best suppliers, most initiatives aimed at increasing an organization's innovation capacity are doomed to failure.
Furthermore, problematic suppliers can generate risks to the brand's image, delays in deliveries, values that are out of line with market reality, inadequate raw materials, among other obstacles.
To help purchasing professionals in their mission to choose the best suppliers, we have selected the main tips on the subject:
Read on!
Supplier Selection: How to Select the Best Partners
1. Do market research
Supplier selection should begin even before the purchasing professional knock on the doors of potential partners. Therefore, market research is essential in this process.
Before proceeding with the contract, seek as much information as possible. To be assertive, avoid hiring a supplier based solely on price, as this does not guarantee the best choice.
However, it is essential to evaluate the prices charged by suppliers, after all, financial balance is one of the things that helps to ensure healthy business growth.
When choosing, weigh everything up: competitive price, quality of the product or service, reputation in the market and the results that can be achieved with the new partnership.
Also evaluate the working and supply methods, and understand if there is synergy with your business.
2. Check the supplier's credibility
An essential step before selecting suppliers is to check the company's credibility. This step reduces risks related to partners and prevents unforeseen events and delays.
Talk to other organizations that already trade with the chosen supplier, understand the transaction history, whether there are financial, legal, or security risks. compliance or reputational.
Avoid Dory's attitude! Not knowing the risks related to your partners is very risky, because it is your company's name that is at stake!
In this situation, ask the customers to contact you and, if any company you consulted has terminated the contract, explain the reasons. Take the opportunity to learn about the strengths and weaknesses of this supplier.
Your company can also choose to transact with companies that have been operating in the market for a certain amount of time, thus increasing credibility.
Also ask for the supplier's contact information to check the support provided and how the communication channels work. All of this makes a difference in the buyers' routine.
Another important measure is to check the quality of the products and services sold.
Ask the supplier to send samples for analysis and, when talking to customers, you can ask about this issue and check whether the products delivered correspond to the samples sent.
3. Evaluate supplier transparency
the best way to manage risks in the supply chain is to have a relationship with suppliers based on transparency and trust.
Therefore, question the supplier's current processes, what problems they have had in the past and how they were corrected.
Remember that buyers and suppliers must work together to facilitate a negotiation with a fair price and adequate delivery time.
Also, find out the supplier's ability to meet increased demand and urgent orders. This way, you don't run the risk of stopping your company's operations.
4. Check that deadlines and deliveries are met
At the time of negotiation with suppliers, it is important to make clear the needs of your business and expectations for the new partnership.
Ask whether the partner is able to meet the expected deadlines and deliveries. Ideally, the contract with the supplier should address these issues.
When deadline and delivery definitions are not well established in the contract, your company is subject to the suppliers' conditions.
Don't forget to clarify the importance of the supplier's service flexibility, in case it is necessary, for example, to increase demand in a given period.
5. Hire suppliers with goals aligned with yours
The supplier is an important link in the supply chain, and is directly related to your company.
Therefore, work with partners who have goals and values aligned with those of your company.
This is a way to ensure customer recognition and improve brand image.
If the company has a positive difference compared to its competitors, every entrepreneur will want to reinforce that idea.
Add more value to your business by establishing commercial partnerships with suppliers who have similar principles.
6. Don't depend on a single supplier
You want to have a good supplier and establish a trustworthy relationship. However, no matter how reliable they are, unforeseen events and problems can always occur. For this reason, purchases should not be 100% focused on just one supplier.
Having a plan B avoids problems if the supplier unexpectedly terminates the contract or is unable to deliver the product within the stipulated time frame.
Your company has a commitment to its own customers, who also demand that their purchases be delivered on the agreed date.
The selection of suppliers takes into account a series of aspects, which involve deadline, delivery, quality, relationships, among others.
The tips left here will help you hire good suppliers and considerably reduce future problems related to them.
Finally, a classic quote from the movie Finding Nemo to inspire you in your challenging career in shopping:
Keep swimming!
Did you like our tips or do you have a story to share on the subject? Leave your comment.
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