How to Develop a New or Better Supplier

Aug. 14, 2012
Ongoing evaluation and communication are keys to getting and keeping top suppliers, says the American Purchasing Society

Make a list of all the things that make a good supplier. Then compare your present suppliers with each item on your list. You will find that very few of your suppliers measure up to the ideal. Those where you spend the most should be given priority for improvement efforts. Next on your action list are those that do the poorest in matching your criteria.

Look for new suppliers to replace your worst performers unless you are certain the existing suppliers can be improved within a reasonable time. Let us look at some of the issues that call for improvement.

  • Delivery on schedule.
  • Low costs or competitive pricing.
  • Quality that meets or exceeds specifications.
  • Prompt service.
  • Flexible terms and conditions.
  • Dependability; always performs as promised.
  • Maintains a stable and profitable business.
  • Innovative; offers valuable ideas.
  • Cooperative and reasonable with requests.
  • Trustworthy; keeps buyer information confidential.

Make sure that your existing suppliers know exactly what you expect. Don’t take this for granted, especially if you are new to your organization. Don’t assume your predecessor conveyed what was expected. He may have had different expectations or he may not have communicated anything at all to the supplier about how to perform.

Although you look for new suppliers to replace your poor performing ones, it doesn’t mean you necessarily are going to quickly replace them, if ever. It simply means you are preparing to do so if absolutely necessary. You never want to change suppliers hastily or without very good reasons. You certainly don’t want to change to a new supplier unless you are reasonably sure that the new supplier will be better than your last.

You should pre-qualify new suppliers by obtaining financial information, references, and samples if appropriate. Make sure you actually check the references out. Your company may be willing to help the new supplier if you determine that the potential new supplier does not have sufficient financing or equipment to do the job but qualifies in every other respect.

You or others in your organization may need to do some training in order to obtain your ideal supplier. You may need to set up meetings with the supplier’s financial or accounting personnel, with its operations personnel, with its marketing or service personnel, or with any other department that may be involved with your business. These sessions may only last a few hours each or may last for many days depending on the complexity of the products being purchased and other aspects of the purchase.

It is beneficial to go over product specification carefully and in detail. Assess the technical capabilities of the supplier. It may be necessary to enlist the help of your own technical personnel to help with this evaluation. The buyer may require the potential supplier to hire one or more specialists necessary to produce the type of product required.

Many companies require samples of the final product for testing or approval before giving a new supplier the go ahead for the full order quantity. It may be necessary to get new samples several times before final approval is given.

For some products, developing a new supplier may only take a few days or less. In other cases it may take many months to find, qualify, and train a supplier to meet your standards. Frequent and constant monitoring of new suppliers may be required. You can’t assume that once the locating, qualifying, selection, training, and order placement is submitted that everything will then be satisfactory. Inspections and supplier audits are necessary to keep excellent suppliers although the amount of checking usually ends up being much less than with problem suppliers.

This article was reprinted from the American Purchasing Society,

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