Choosing the right suppliers is crucial to leverage the results of your business. This is quite a challenge for companies, particularly in the case of direct procurement, that is, related to the marketed product or service.
Therefore, before making any decision, the buyer must consider some criteria at negotiation time, in order to be assertive when choosing new suppliers.
Despite being a very relevant factor in procurement management, price is only one of the requirements to be considered when selecting suppliers.
To avoid problems, you must prioritize partners that are aligned with the company’s goals and committed to quality and deadlines.
In this context, businesses that want to preserve good reputation and increase their competitive edge should be attentive to suppliers’ commitment to environmental, social and governance (ESG) issues, as customers are now demanding initiatives and actions related to such factors.
In this article, see our tips to avoid mistakes when choosing your suppliers and to leverage your results.
Seven tips to avoid mistakes when choosing suppliers
1. Aligned goals
Choosing suppliers with goals aligned to those of your company is the first step to achieve reliable and lasting relationships.
In this sense, collaboration between buyers and suppliers, with an agile and transparent communication, is beneficial to strengthen both of them.
So, for instance, if your company has sustainability as a value, you can have bad reputation by buying from suppliers whose businesses don’t contribute to mitigate the greenhouse effect.
2. Quality of products or services
It’s no use negotiating a good price with suppliers if the products or services they offer has poor quality.
As it’s difficult to be 100% sure that a product or service has excellent quality, perform tests and evaluations calmly, if possible, and rely on the help of specialized professionals.
Therefore, you must prioritize product quality to avoid bringing significant losses to your company, incurring lost profits and even stopping your production line and business continuity.
3. Supplier reputation
One of the most common mistakes when selecting suppliers is failing to research about them in depth, as this can impair your company’s reputation.
Try to understand the trajectory of your future partner in a better way. See whether his company complies with legal, tax and technical regulations, among other important assessments.
Before engaging in a partnership, talk to leaders of companies who have already been served by these suppliers. The length of actuation time in the market must be also considered.
4. Negotiate to achieve savings
Negotiating with suppliers is a significant step to achieve more savings and, consequently, increase profits.
For this reason, make a research on market prices, make comparisons and show the suppliers how much your company is willing to reach the best negotiations.
Before making any decisions, review your budget, set goals and identify opportunities to decrease the cost of purchases.
5. Specify what you need
It isn’t uncommon that a request for quotation is delivered to suppliers without a full and detailed description of customer’s needs – which will further extend the procurement process.
To negotiate with suppliers in an agile and easy way, describe the details of the product you want, the terms you need and payment methods you are used to.
With accurate and defined information, you can know if the suppliers have the capability to meet your needs and, therefore, the commercial partnership will be established with more realistic expectations.
6. Rely on more than one supplier
Unforeseen events, failures, mistakes and errors can happen in any business. So, have a plan B for the supply of products and services that your company needs.
Even if your current suppliers guarantee their services and have no history of issues, it’s important to rely on other partners, who can serve your company in a similar way.
Besides, having more suppliers can help your company in case of a sudden increase in demand, for instance, so your customers won’t be waiting for a long time.
7. Always value communication between companies
Communication is a two-way street. To achieve better results, buyers and suppliers must be willing to communicate in a clear, objective and simple way.
Therefore, consolidating information in a single place, with easy access to all those involved in the process, can greatly facilitate the routine of buyers and suppliers.
There are now several platforms to contract, evaluate and approve suppliers, such as the SRM (Supplier Relationship Management) solution from Mercado Eletrônico. It can certainly fulfill the needs of your company.
In this post, you had tips to optimize the choice of suppliers in your company, and how it can help you achieve better results in your business.
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