How to find suppliers for your business:

• Existing suppliers or competitors’ suppliers.
• Trade journals, trade associations and Chambers of Commerce.
• Business link.
• Directories — in the library or on the Internet.
• Business directory websites - www.aceprocedures.com
• Suggestions from friends and employees.

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How to start official communication with suppliers:

Start writing to suppliers - 

• asking to send you product details, price lists and other relevant information.
• you can often obtain better terms by letting suppliers know that they are competing for your order.

How to select suppliers who can offer the quality of product and service you need:

Check for following quality in your supplier

• Product suitability and reliability.
• Reputation, based on references.
• Quality and flexibility of service.
• Location and ease of communication.
• Speed and frequency of delivery.
• Price range and order size.

How to assess their performance:

For long-term supply contracts, make the effort to visit those suppliers that seem to meet your quality standards. Mainly the following standards:

• Are they professional? 
• Do they have too much work, or not enough? 
• How eager are they for your business? 
• Do they have the necessary equipment and space to cope with your order?
• Do they appear to be financially stable?
Get quotes, including details like discounts and payment terms, to use in negotiations.
• Ask how often prices will rise, what influences will cause them to rise, and how you will be notified.

How to decide on the prices:

• For a healthy, long-term relationship, do not negotiate too hard a price at the expense of quality.

How to maintain better supplier relations:

1.Put most of your effort into:

Supplies you will spend the most on — five or ten items may account for 90 per cent of the money you spend.
Supplies crucial to your production.

2 Avoid over-dependence on one supplier.

What happens if the supplier goes bust?
Alternative suppliers provide competition.

3 Give most of your orders to just a few suppliers.

If appropriate, ask for bulk or cumulative discounts (eg. if you order 5,000 units in the next year, you get a 5 per cent discount on all orders during that period).

4 Treat suppliers well and they will treat you well.

Keep them up to date with your needs.
Build a relationship of trust.
Ask for their views and ideas.
Consider establishing long-term partnerships with key suppliers. Cooperate to improve the goods and services supplied and relevant procedures and systems.

Things that have to be kept in mind while selecting a product and its supplier:

• Buy the product that offers the benefits you want. Never buy on price alone.
• Focus your price-cutting efforts on those items you spend most money on.
• Focus your quality-boosting efforts on items which most affect the quality of your own product.
• Keep accurate records of all purchases.
• Do not ‘squeeze’ a supplier if you plan to buy regularly from that source.
• Look for opportunities to pay using your product instead of cash. (‘I’ll give you some furniture, if you do my accounts.’)

How to prepare a supplier agreement:

The following agreed terms should find place in the agreement.

1 Agree in advance what will happen if the supplier’s goods are faulty.

• Will the supplier replace the one faulty item or the whole batch? 
• Will replacement supplies be delivered immediately, or will you get a credit note? 
• Will replacement goods be free? Who will pay for delivery?

2 Ensure that the supplier fits in with your ordering systems.

• Will the supplier agree always to quote your order reference?
• How will you be able to avoid paying for all the goods when part of a delivery is incorrect?

3 Agree on payment terms.

• Payments in advance should generally be avoided, especially if you are unsure about the supplier’s creditworthiness.
• Ask for a discount for early payment.

4 From order to delivery

5. How much stock do you need to hold?

6. Guarantees

7. Technical support

8. Technical skills or training required — would you need to hire specialist staff?

9. Options for expansion and upgrading — or will the equipment soon be obsolete?

Vinod Kuriakose

(The writer can be contacted at feedback2vinod@yahoo.co.uk)