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6 Things to Remember When Sourcing Suppliers and Vendors

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Working in enterprise business spaces, your company is never truly self-reliant. You need third-party experts for all kinds of things from legal support to financial analysis. Additional third-party support includes your suppliers, vendors, contractors, and everything else necessary to run a company.

In particular, vendor and supplier relationships are invaluable, as these business partners need to be more reliable and adaptable than most. The difference between a great supplier and a mediocre one can be the difference between sustained annual growth and stagnation.

 So, when you are sourcing new vendors or suppliers, it’s always important to remember some best practices that can help you make quality decisions. There are plenty of options out there; you just need the resources to find the best. For that, you can consider these simple tips. 

Think About Politics 

That’s certainly not a fun thing to read right out of the gate, but it’s extremely important. If recent events have taught the world anything, it’s that geopolitical disruption can happen anywhere and at any time.

So, it’s important to think about the geopolitics that might affect vendor and supplier relationships. A supplier in Canada that delivers to the United States is going to be a lot more geopolitically stable than plenty of other cross-border relationships you can imagine.

It might not be fun, but when you are comparing options, consider the politics.

Audit Their Finances

There are severe limits to how much you can know about a business partner’s finances, but if they do have public records, you can do your homework. Vendors and suppliers do not have to be publicly traded in order for you to see some of their finances. Many statements are made publicly. Beyond that, you can also ask for a financial portfolio.

It’s perfectly reasonable to want to get a feel for the financial stability of a potential business partner. Take the time to get access to those numbers, and take even more time to study them thoroughly. It’s essential.

Compare manufacturing Locations and Shipping Destinations

Geopolitics is certainly important, but so is plain old geography. Distances matter. Borders matter. Physical obstructions like mountain ranges matter. Weather matters.

 It’s important to go over the pure geography that is at play when receiving essentials from vendors and/or suppliers. Where are the goods originating? Where do they have to go to reach you?

 If all other things are equal among your potential partners, go with the one that is closer. In even better terms, go with the supplier that is less likely to ever miss delivery for weather or geographic reasons.

Double-Check Lines of Communications

How exactly do you communicate with the supplier or vendor? In some cases, you might have a dedicated representative who is only there to work with you and make you happy. Other situations are not quite so simple or favorable.

Can you communicate at all hours to discuss emergencies? Is it easy to get a response if you need to make sudden and dramatic changes to your orders?

There are a lot of ways to communicate with a business partner, and you need open lines with reliable response times. Anything less puts you at risk.

Consider Third-Party Risk Management

Speaking of risk, you can consolidate a lot of vendor and supplier research by taking advantage of a professional service. You can get a risk assessment (or audit) of any potential business partner from a third-party risk management professional. With this assessment, you will see clear outlines of the greatest risks and how they might manifest.

That allows you to compare potential partners in great detail, and you can plan around the largest risks that you are willing to endure. It’s a great tool for solidifying your decisions as you browse vendors and suppliers, and it can lower the amount of labor you have to invest in vetting your future business partners.

Get the References

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All of the previous tips are useful, but this one is the anchor for a reason. If nothing else, get direct feedback regarding your vendors from people who have worked with them before. Don’t limit your research to online reviews.

You should vet a potential business partner as thoroughly as you would a new CEO. Find references, make the calls. Follow up as needed. Nothing will give you more information and a stronger understanding of how a supplier or vendor operates than the direct feedback you will get from their active customers.

Ultimately, finding reliable, valuable business partners takes time and energy. There are no shortcuts, so while you’re vetting your options, be wary of pressure tactics and binding contracts. Sure, you might need to settle to meet the demand for short-term supply issues, but investing in reliable partners for long-term beneficial relationships is difficult to oversell.

When your supply chains are truly reliable, adaptable, and scalable, your future is brighter and more secure.

Written by Staff

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