Things to Consider When Approaching a New Supplier

01/03/2021 | Share:

When setting up an ecommerce store or introducing a new product range, you may need to partner with a new supplier, especially if you don’t manufacture the products yourself or you acquire parts from multiple suppliers before combining them together into a unique product.

Before you go ahead and choose a supplier, there are several things you want to check or ask.

What can the supplier do for you?

First and foremost, is what the supplier can do for you. At the end of the day, you will be paying this supplier for goods so you need to know exactly what they can and can’t do for you and compare this with other suppliers you’ve spoken to. How is their product or offering unique and how does it benefit your business? If you’re switching suppliers, what can they provide that your current supplier can’t?

Who else do they supply to?

It’s important to know who else the company supplies to. If they supply to companies that are performing well, this could be a good sign that they’re happy with this supplier.

On the other hand, you need to make sure that the supplier is not over-reliant on a successful few customers. This could lead to the other customers receiving priority over your needs. You need to make sure that they appreciate the importance of your business too.

If you’re serious about finding out more on the relationship they have with their existing customers, you could always ask for references or testimonials that prove their worth.

Is the supplier’s business stable?

You need to make sure that the supplier you’re doing business with is financially stable and not a risk to you. If you choose a supplier and their business goes under, you could be left with a gap in your supply chain or no products at all. And that means you’ll lose money. By investing in a stable supplier, you minimise this risk.

Supply and demand

One of the most important things to check when talking with potential new suppliers is their ability to meet demand. You are ultimately responsible for satisfying your customers and you need to know that the supplier can help you do this. Can they regularly meet your needs on top of their existing demand? Would the supplier be able to cope with an increase in demand?

With this in mind, you’ll also want to check what their standard lead times and minimum order quantities are. If you’re a small business and the supplier has a high MOQ, you may struggle.

Are they ethical in their approach?

The last thing you need is to be associated with a supplier that partakes in unethical business practices. Make sure that your supplier has never been involved in practices such as bribery, poor working conditions or forced labour, to name but a few.

You may also want to consider the supplier’s carbon footprint and whether they’re taking steps to reduce their impact on the environment and global warming.

What are the costs?

Finally, you need to consider the cost to your business when working with this supplier. Make sure you cover all of the angles such as exceptional orders, delivery etc. Is there a discount for placing larger orders? Once you know these costs, you need to determine how they will affect your product margins.