Finding new suppliers is one of the most important decisions that enterprises will make. Entrepreneurs must go through a rigorous process to choose suppliers and provide them with long-term services. The right supplier needs to be reputable, consistent, reliable, and truly able to offer you high-quality products.
If you are looking for new suppliers or studying potential suppliers, please consider these key factors, and we have given some tips to help you find the right supplier for your business.
5 Key Steps to Find New Suppliers for Your Products
If your supplier is unreliable or can not provide high-quality products, it will be difficult for you to provide goods and services at reasonable prices which meet customer expectations. So we have listed 5 steps you should know when choosing your new suppliers.
Step 1. Set the standard
Create a list of criteria that suppliers need to meet to meet your needs.
Here are a few points to consider:
Ideal delivery time: how long do you want to wait between placing the order and receiving the goods?
Maximum order quantity and minimum order quantity: the parameter of one order quantity.
Direct selling ability: the ability of suppliers to deliver high-quality products directly to consumers.
Quality assurance process: steps taken by suppliers to ensure product quality.
Terms and conditions of payment: how do you pay and what are the terms of payment?
Return policy: conditions that allow you or your consumers to return goods.
Communication standards: the responsiveness of suppliers and the ability to communicate language barriers (especially important when working with overseas suppliers).
Setting standards in advance will allow you to evaluate potential suppliers for each listed project and ensure that you do not ignore any important requirements.
Step 2. Browse your options
If you know the type of product you are selling, you may need to access the supplier catalog (such as Alibaba) to see which suppliers provide the products you need.
Use this period to evaluate your potential suppliers based on the following criteria:
Credibility: what do other business owners think of this supplier? Is it a reputable supplier, or will it steal your product ideas and damage your business?
Business type: depending on your business model, you may need to choose a wholesale supplier, a direct shipping supplier, or a private label manufacturer. Make sure you know which suppliers are which.
Security: a good supplier provides insurance and fraud protection. Avoid working with suppliers that do not protect your business.
When looking for new suppliers, it is important to check the evaluation of other businesses. It may give you a better understanding of whether suppliers will meet your expectations.
Step 3. Bidding
Once you have a shortlist of legitimate wholesalers, direct shipping suppliers, or suppliers you are interested in working with, you can initiate a bid.
You may need to fill out a proposal (RFP) form or a quote request (RFQ) form. In this case, you should include all details about the product or service, quantity, delivery date, and standard quality.
You can also communicate with suppliers about their processes and strategies during this process. We strongly recommend asking potential suppliers about their raw material plans and purchases. If suppliers use dangerous reordering practices or obtain materials from unreliable suppliers, try to be skeptical.
Step 4. Bid evaluation documents
After receiving the quote, please evaluate your choice. Compare each supplier to see which ones best meet your budget requirements and quality standards. You should also pay close attention to pricing, because you don’t want to choose a supplier that charges too much for their goods, thus reducing your profit margin.
At this stage, you should also conduct another inspection to ensure the validity of your supplier’s bid. If you work with a direct shipping supplier or wholesaler, you can ensure its legitimacy by requesting product samples and ISO compliance documents.
Once you choose to bid, communicate with your supplier and negotiate the terms of your contract. Make sure your contract guarantees a favorable price to protect your profit margin. You can also sign a short-term contract as a form of trial run. That way, if your supplier can’t solve the problem, you can cut off contact.
Step 5. Monitor the performance of new suppliers
No one wants to work with unreliable suppliers. Keep a close eye on your suppliers so that they deliver on their promises. If they often delay delivery, send incomplete orders, or provide shoddy goods, you can use this data to negotiate with your suppliers to improve the process.
If you fail, you may have a reason to terminate the contract and cut off contact with the supplier. It allows you to start with a new, hopefully, better supplier.
5 Key Factors you Should Consider When Finding New Suppliers.
If you are looking for a new supplier, or are currently studying potential suppliers, make sure you consider these five factors to help your business find the right one between potential suppliers.
- Factor 1. Supplier cost
Cost may be the most obvious but equally important factor when looking for new suppliers.
Of course, you will have a number on your mind, because you will know what product you are looking for and how much you are willing to pay.
Nevertheless, prices may vary from supplier to supplier, so it’s important to shop around and see who can offer the best price.
You should weigh all the options before deciding which supplier is the best.
- Factor 2. Quality
There is usually a correlation between cost and quality: the more expensive the product, the better the quality. Regardless of the price, there is still a predetermined and agreed level of quality, and you want to ensure that your expectations are met.
After all, when your supplier sends you something completely different, the last thing you want to do is market your product as a high-end product. Quality not only refers to the physical product itself but also to its related aspects.
For example: whether the product is adequately packaged and how to protect it during transportation. Are they labeled correctly?
Talk to potential suppliers and make sure you fully understand what they will offer you because you don’t want to sign a contract and then be disappointed.
- Factor 3. Reliability and previous experience
It is important to remember that when looking for new suppliers, you are building a long-term relationship with them. It is similar to hiring a new employee because you want to see a letter of recommendation.
Don’t be afraid to ask them; it makes sense that you want to listen to companies that have previously worked with specific suppliers.
Because they can honestly show you the relationship and list any good or bad.
If you decide between two suppliers, the presenter will have a great effect on who you choose.
- Factor 4. Share the culture
Expectations will be met only when both sides are clear. A good supplier relationship is based on the same cultural goals and attitudes.
Talk to suppliers directly to learn how they work with other companies. If you want to communicate continuously, but they prefer to “look forward”, then it won’t work.
When you talk to suppliers, you ask them questions; they may ask you as many questions.
Use this time to measure whether your cultures and expectations are similar because you should have a good idea of whether the relationship will succeed.
- Factor 5. Geographical location
Location is an important consideration when looking for new suppliers.
If you are a local company that builds a brand on the expertise of your region, you will want to focus on finding nearby suppliers and sharing your values.
On the other hand, if you want to expand internationally, you may want to recruit suppliers further afield. For example, if you are a British company that wants to do business in China, it makes sense to work with Chinese suppliers.
Because they will understand the rules and regulations of the enterprise, they can deliver goods more easily.
7 Tips for Finding New Suppliers.
When looking for new suppliers, you can’t expect them to think the same way. Western thinking is very different from Eastern thinking, and you can’t impose your thinking on your suppliers. Poor communication can easily be frustrating. To help you prepare, here are 8 tips for finding new suppliers:
- Tip 1. Don’t assume that factories, trading companies, purchasing agents, manufacturers, and suppliers are all the same.
There are a lot of terms to master in this industry, and many of them overlap, but it can be frustrating to know what’s going to happen.
A factory is a place where products get produced, whether they are people or machines.
The trading company is the middleman. They find suppliers for you and ship the products to you, but before they do so, they will raise the price slightly to make their profit.
Purchasing agents are similar to trading companies but different. They’re more like a contact.
The purchasing agent may ask you to contact different factories directly or review multiple suppliers to find the best price.
They also usually provide factory and product inspection as well as transportation and logistics opportunities. “Manufacturer” and “supplier” are loosely used. They can overlap with any of the previous three terms. According to general experience, they can be any of the first three. Usually, the manufacturer is synonymous with the factory, while the definition of the supplier is broader.
- Tips 2. Don’t just evaluate the price.
Once you have all the quotations, it’s time to choose a supplier.
Although price can affect a company’s profitability, it is important to think that the cheapest supplier is not always the right supplier.
On the other hand, the most expensive suppliers cannot guarantee the best service.
On the contrary, it is best to solve problems related to quality, flexibility, and delivery experience in this area.
It will give you a complete understanding of the services you provide and prevent you from getting something cheap but unsatisfactory.
In addition, pay attention to deals that can’t be missed. If the product quality proves to be good and the supplier is a large company, then a price well below the market price may indicate a problem.
- Tip 3. Don’t try to negotiate the shipment.
There is a big difference between comparing freight rates and trying to negotiate freight rates. Only some suppliers will negotiate shipment with you because they have to charge the lowest price.
Sometimes they will charge you the exact freight, and sometimes they will charge you extra because they also have to make money.
Trying to negotiate shipments may make suppliers think that you don’t know what you are talking about and that they are unlikely to want to continue to work with you.
So don’t bargain. You only need to compare the freight between several suppliers and then you can find the best deal.
- Tip 4. Don’t assume that most of the suppliers on Alibaba are factories.
Many suppliers on Alibaba will tell you that they are factories, even if they are not, this is normal. For them, it’s just a good deal.
But most of them are probably just trading companies, buying products directly from factories and then raising prices slightly to make a profit on resale.
- Tip 5. Don’t think that suppliers must be factories just because they claim to be factories.
Just because the supplier shows you a picture of a factory doesn’t mean they are a factory. Today, you can set up a website and put anything you want on it, and so can the supplier.
But that doesn’t mean they’re trying to deceive you or deceive you. All they know is that Western brains think that going directly to the factory will bring you the best price. However, this is not always the case.
- Tip 6. Don’t think that working directly with the factory means your salary will be lower.
Usually, the trading company can give you a better price than the factory. Why? Because they have a good relationship with the factory, the factory gives them a better deal.
If you are not familiar with the work of a factory, you need time to win their trust and build a good relationship with them. The factory will not offer you a better product deal unless they trust you.
However, the factory has established a good relationship with the trading company, so the trading company has got better deals. These trading companies then pass these transactions on to you.
- Tip 7. Cooperate with the purchasing agent.
Especially when you start the Amazon sales business, it’s important to get guidance and support from the right experts. If you fail to do so, your business will face serious risks, including fraud, product quality problems, and legal risks.
Chinese purchasing agents are proficient in all aspects of purchasing products from China for Amazon sellers and assist in the process. Start with finding the right supplier, negotiate the best price, and then deliver; even experienced sellers can benefit from working with reputable purchasing agents.
Since purchasing agents have offices in China, they can visually inspect the facilities of manufacturers to ensure fair trading and establish strong relationships with local suppliers.
Purchasing agents also conduct factory audits and objectively assess employees, equipment, processes, automation, management structure, and other factors, such as socially responsible or sustainable procurement.
FAQ about new suppliers.
- 1. What is purchasing new suppliers?
Purchasing new suppliers refers to retail brands looking for the best supplier cooperation in purchasing products, delivering products, creating packaging, and so on.
- 2. How to find potential suppliers?
First, search for the supplier you need. You can do this by searching online, networking, or asking other shopkeepers who to recommend.
Then contact their sales team and ask them how they will work with you to review them. Choose your best supplier and sign a contract to start cooperation.
- 3. What is supplier management?
Supplier management is about finding and maintaining relationships with suppliers for your store. It includes cost reduction, communication management, and risk reduction.
Conclusion of Finding New Suppliers.
Finding new suppliers will be an upfront investment, but it is the key to creating an efficient supply chain.
This is just the beginning of the supply chain because you lock in suppliers who can deliver the high-quality goods you need at a price that suits your business.
If you have any questions about running a wholesale business, please leave your comment. Or you can read previous blogs to get the latest information.