There’s no doubt that global supply chains have changed quite a bit because of the COVID-19 pandemic. New public safety measures, limited raw materials, and the global political climate all have an impact on how we do business, amongst many other factors. Business leaders must take a closer look at all elements of their business to make sure they can withstand pressures on their supply chain, both now and in the future.
One of the most important areas you can focus on to help your business roll with the punches is your current and future supplier relationships. Surely your business has relied on suppliers to help you deliver goods and services to customers – but if you’ve limited your business to just one or two quality suppliers, you may be putting your business at risk if those suppliers face hardships that cause them to shutter.
See below for our tips on how to source quality suppliers for your business.
- Align on your business goals
Before you begin sourcing, make sure your team is aligned on your business goals. Sourcing is a big endeavor, especially because you must get it right – so why not take the time to identify what you’re working towards? You want to be absolutely sure that the team is working towards the right goals. Don’t be afraid to ask the simple questions first, even if you already know the answers… sometimes problems are found in the most obvious places:
- What is the mission of your business?
- How do you make money?
- What are your business goals?
- How does the achievement of your business goals help make more money?
- How would a supplier relationship help you achieve your business goals?
- How would a supplier relationship help you make more money and fulfill the mission of your business?
Now you and your team have a grasp on how a supplier relationship will help your business grow. This is where you can create a new business goal for your team: to source a strategic supply partner. Be sure to align on a realistic timeline and agree on how progress is reported.
Sourcing the right supplier for your business could take months. Give yourself wiggle room to achieve your sourcing goals. Sometimes quality takes extra time, and in this case, it’s worth taking it!
- Spend time identifying requirements for your supply partners
The next question to answer is: who is the right supplier for you? This is a broad question that demands specific answers. We recommend creating a matrix or scorecard to help you organize your thoughts into categories like company profile, cost, quality, and delivery, to name a few. You will need to use your immediate business needs, industry knowledge, customers’ needs, your debtors’ requirements, and a little bit of market research to provide guidance here. Make sure you consider the following:
- Are you looking to fulfill a short-term need or to establish a long-term partnership?
- Do you prefer working with a multinational company, or a small business? Does this matter to you?
- Where is your ideal supplier located? Do they need to be located somewhere specifically? i.e. proximity to raw materials, industry relationships, etc.
- If you need to source an international supplier, consider geographic location, economic and political climate, ease of doing business, culture/communication differences, and natural disaster risk
- Does your supply partner need to have certifications or fulfill any quality/inspection requirements?
- What are you hoping to pay for the goods or services provided by your supply partner?
- Do you want your supply partner to align with your company mission and share your values?
- Does your supplier relationship need to follow any legal requirements set by your industry or your country?
Once you have your thoughts organized, you’re ready to start sourcing!
This step is where you define the quality you will expect of your new supplier relationship. There is no such thing as being too thorough here, but you could go too fast and miss crucial requirements that will come back to haunt you later in the sourcing process. Make sure you set time aside to complete this step without distraction!
- Do your research to make a shortlist of possible suppliers
All you need to start sourcing are the tools you have easiest access to: your phone and your computer! We recommend starting with your network. You may have done business with someone who has a good referral. You can also go through your contacts, LinkedIn, and other social media sites to find other possible connections. Maybe you know someone in the same country where most suppliers are located. Don’t hesitate to reach out cold if you want to.
You can also go to your favorite search engine to find suppliers. Your search can be as easy as typing the name of the product or service and adding “supplier” at the end of your search string. Add other requirements to your search as well, like the location or the certification you need. When you visit websites that come up in your search, look for any evidence of quality – whether they showcase customer testimonials, mention specific certifications or approvals, or whether their website is easy to navigate. Don’t hesitate to dive even deeper here by searching the names of the customers or businesses in their testimonials, or finding customer reviews, or looking up their business address.
Once you identify a supplier you’d like to work with, give them a call directly or send them an email. During this crucial first contact, ask all the questions you need to qualify them. Learn more about what it’s like to work with them, how they can help you achieve your business goals differently than other suppliers, their requirements, and how they match up to yours. Be transparent about where any obstacles to doing business together may be.
When you make first contact with a supplier, try asking them about other suppliers on your list, just to add another angle to your research!
- Follow a strict due diligence process
Once you identify one or multiple suppliers, it is worth taking extra time to ensure that a supplier meets the requirements you defined earlier. This is accomplished by following a robust due diligence process. Additional due diligence is necessary because trust is so crucial when making sure your customers’ needs are met. When you conduct your due diligence, consider finding answers to some of the following questions:
- What is the supplier’s financial stability? Do they have a history of successfully completing orders with similar sizes to yours?
- Is the supplier capable of meeting current and potential demand?
- Can the supplier provide you with their business certificate?
- Does the supplier have detailed product spec sheets and product certificates?
- Can the supplier send you a product sample?
- Are they manufacturing the product directly? If not, what is their relationship with the manufacturer? Do they have an allocation letter or distribution authorization letter from the manufacturer?
- Are there other documents that you can request from the supplier to ensure they meet your requirements?
- What are their expected lead times and delivery times? Investigate the percentage of orders that arrive at the final destination on time.
- Does the supplier have any professional references? To obtain them, ask for references from current or previous customers.
- If it’s important to your team, find out if the supplier operates using sustainable and ethical practices. Ask the supplier about factory or warehouse conditions and how they treat their workers.
Once you have done your research, called on the supplier’s references, and asked the right questions, you are now ready to finish your due diligence by arranging an on-site visit with one of two suppliers that best fit your needs. It’s important to meet the supplier in person if you can, especially if you wish to create a long-term partnership. However, if you are unable to do the onsite visit yourself, contact a local firm that offers due diligence services who can conduct the onsite visit on your behalf. They will send you proof of life photos and videos of the supplier’s facility, amongst other crucial information, to confirm whether the supplier is capable of fulfilling your needs.
Ask yourself and your team: do you have rapport with the supplier? This is often overlooked but extremely important.
Once you finish your due diligence, the choice will be clear. You have just sourced another quality supplier that you can be sure will help your business grow. It’s time to place an order and see if your due diligence pays off!
Supplier relationships have been a cornerstone of pre-pandemic supply chains and have become even more important as a result of the pandemic. It’s become abundantly clear that nurturing your suppliers and ensuring that you have high quality and consistent providers in your supplier network will help your business better withstand pressures caused by supplier hardships.