Selecting a supplier is a critical process within a business. It depends upon a number of factors such as reliability, reputation, cost, service and value for money. However, thinking strategically really helps in choosing a right supplier for your business. Most suitable suppliers are the ones that supply products or any service according to your business needs and demands. Therefore, before choosing a supplier it is important to clearly identify your business needs and what you actually want to buy.
These are the characteristics that you should watch for during supplier selection.
Value for Money
Suppliers with very high or low prices are not always the best. It is important to find such suppliers whose product or service corresponds well to the price they demand. Therefore, it is important for the buyers to select the suppliers that offer best value for money.
One should choose a supplier who communicates honestly with you. For example, if they cannot deliver on the time that you specified, they should be honest with you. A supplier should communicate regularly with the buyer about their demands and requirements.
It is important to choose suppliers that are reliable and trustworthy. If a supplier is unable to provide quality work, there are chances that it might let you down before your customers.
The suppliers having a large stock in trade are the best choice. Because such suppliers are capable of fulfilling your demands any time you need something. Therefore, it is important to check their credits before selecting a specific supplier.
A supplier should be capable of providing the best quality, because a bad quality products from your suppliers can damage your image for your customers.
Importance of supplier selection
Due to the growing competition globally, the buyers and suppliers need to change the way they deal with one another. Therefore there is a need to adopt a strategic partnership in which the buyers and suppliers have a very cooperative relation. This mutual relationship means an engagement over a lengthened period of time which involves sharing of facts, risks and benefits jointly.
The aim of supplier selection is to ascertain the excellent supplier who proposes the best value for money of product or service. Appropriate supplier selection ultimately results in high profit and quality. In this strategic partnership, the supplier is considered as an intrinsic part of the organization. Following reasons shows the importance of supplier selection with the growing competition between businesses.
- As a lot of organizations are adopting just in time manufacturing, there is a supply base reduction and resource deficiency. This leads to greater cooperation and long term partnership between buyer and supplier. The buyers and suppliers have to share resources to reduce cost and improve overall quality of product or service.
- As the suppliers are involved in early stages of product design, this result in cost reduction and improvement of quality in manufacturing cycle.
- The team implication bears large importance in supplier selection and evaluation and plays a large role in comprehensive performance of the purchasing company.
An appropriate supplier brings large benefits to your business and has following advantages:
- Supplier selection involves identification and working with the best suitable suppliers.
- It assures that the supplier is well aware of buyer’s aims and objectives and the other way around.
- This builds up a give and take relationship of honest feedback between the buyer and supplier.
- It increases quality and reduces cost of the product or service.
- It ensures constant betterment and modernization between the suppliers.
- It accomplish maximal principle of safety and health in all the actions in which buying firm is involved.
Supplier selection is common to all the purchasers and a critical element in the procurement process. The purchasing managers have to go through complex stages of the selection process and set a special selection criterion for selecting suitable suppliers. In a nutshell, the supplier selection is very advantageous for your business. If a supplier is offering high quality it will ultimately builds up your reputation in front of your customers and the one with low quality products will let you down. Therefore, it is important to wisely select the right supplier for your business.