Choosing suppliers for your business (2024)

FAQs

What should a business consider when choosing a supplier? ›

Done right, supplier selection can help bring about the most value for money for a business or a commissioning plan that aims to maximize its resources and efficiently operate in order to optimize profitably.

When it comes to choosing suppliers, procurement departments rely on a number of qualitative, quantitative, subjective and objective criteria. Since 1991, Weber & Al. have identified three main criteria: price, delivery and quality.

Supplier selection is the process by which firms identify, evaluate, and contract with suppliers. The supplier selection process deploys an enormous amount of a firm's financial resources and plays crucial role for the success of any organization.

Supplier cost

Probably the most obvious – but equally important – factor to take into consideration when looking for new suppliers, is cost. Of course, you'll have a figure in mind as you'll know which products you're looking for, and how much you're willing to pay.

When choosing and negotiating with suppliers, you should consider value for money, quality and reliability in additional to price. Building good relationships with your suppliers will ensure that you get the best service possible.

Clearly defining your organization's requirements is the first step in the supplier selection process. This entails identifying the precise goods or services required, as well as the quality requirements, deadlines for delivery, expected prices, and any other factors that are crucial for your company.

How to know if a supplier is reliable? ›

Carter (1995, 44-45) introduced the so called seven Cs of supplier evaluation (competency, capacity, commitment, control, cash, cost, and consistency) which is rec- ognized as one of the main theories of supplier selection. Later on Carter updated his model with three new Cs: culture, clean, and communications.

A bad supplier can reduce your sales revenues and margins, damage customer relations, reduce the quality of your products and services, disrupt operations and increase costs. A good supplier, on the other hand, will provide you with quality products and services that at least match, if not exceed, your business needs.