Selecting suppliers for your supply chain can seem like an arduous process especially when you know that a good supply chain depends on good suppliers. You should apply your customer service standards when selecting suppliers because customers like dealing with businesses that they can rely on, that are accessible and deliver a great product or service at a reasonable cost. The suppliers you select will influence your brands reputation, and your delivery of good customer service.
There are many factors to be considered when selecting suppliers such as their location and size. Your business will also need to consider whether they are reliable, deliver good quality products or services, and also if they are good value for money. Often it is important that your suppliers are flexible, especially if you have a small business. You will be able to deliver better customer service if suppliers are flexible about 11th hour stock requests, accepting orders of various quantities or processing returns.
It is also important when selecting suppliers that you look into their reputation when it comes to financial matters such as whether they are financially secure. If not then your businesses financial security can be affected. Alternatively if they are a large company and you are certain of their financial security, then you should be careful in selecting them as they may want bigger discounts or want to edit payment terms with short notice.
Once you have selected your suppliers it is important to manage the relationship which involves good communicating, organising and collaborating. By designing a service level agreement template for your business you can set out the scope, quality and responsibilities expected for the relationship. Some businesses may require payment terms, timescales and deliverables to be set out on the template. This can also help you in setting key performance indicators that can measure the supplier’s service.
If your relationship with a supplier is not well managed this could lead to interruptions in the supply chain which can affect customer service. This will ultimately affect your cash flow if you have unfulfilled orders. To ensure a good relationship it is important to show suppliers that they are extremely valuable in your businesses supply chain. By showing them that you want to do business if the service and price are right, you can achieve a long term relationship.
We have made a guide that continues on this topic of managing your supply chain which covers many more obligations of your business.
