When starting a business, it is important to look for a supplier that will help you provide all the most appropriate materials and/or services that will meet your needs. It is one of the major and critical tasks for a businessperson to have a reliable supplier that can keep up with the business goal. You must consider finding a stable and right supplier which is also organized in terms of product prices, delivery, and quality service. Having the right supplier can minimize potential losses of the business you want to start.
What is sourcing?
Sourcing is described to be the activities within the procurement process to identify, evaluate, and select suppliers that will provide to business needs. It involves supplier management, defining business requirements, category analysis or strategy, identifying the suppliers, requesting for information and quotation (RFI/RFQ), and developing contract.
Below are the ways on how to conduct sourcing to match you with the right supplier and gain fruitful relationships to reach your business goal.
Filter list from Department of Trade and Industry (DTI)
You need to invest your time and effort when finding a supplier because it is important to know well and assess their expertise in the business you want to start. You can set criteria for you to evaluate potential suppliers. You may investigate some characteristics such as:
- Years of experience
- Quality of their materials and/or service
- Value for money
- Financial security
Also, it is important that they are trustworthy and someone that you can rely on today and in the future.
After you list down the characteristics you want for your potential supplier, have a right channel to find them. Consider the following channels when finding possible suppliers:
- Recommendations – you may ask your friend, your businesspersons, or a person who can give you the most honest assessment of the qualities they encounter in partnering with a supplier. You can also check recommendations via online. Find their Facebook or Instagram page to verify their services and client’s feedback.
- Online Marketplace- Potential suppliers are now digitally present. Explore them online by checking websites that can easily connect and offer wide list of international and local suppliers.
- Exhibitions – you can have great opportunities in meeting with different suppliers in an exhibition. It will give you a good idea of which suppliers can be relevant and suitable for your business.
- DTI – the agency has a database where you can check the list of reliable suppliers and their industry expertise. Their contact numbers are included in the list as well.
It is easy to know more about your potential suppliers-just do some research and slim them down into four or five candidates which can help you fulfill your requirements.
Look for local suppliers
Many local businesses offer their materials and/or services to other businesses. But finding the right one can be difficult. You need to find someone that can help you put up the pieces together to establish your business in the market. Consider the price as well if it is affordable and if they can help you serve in a different geographic region. These are the things you will assess upon looking potential local supplier but, why is it important to have local supplier?
- It can demonstrate investment in local communities
- Cuts down fuel emissions in transporting goods and/or services
- Great predictability of delivery times and costs
- Great control in supplies (where you can visit the site to monitor the quality of the supplies)
Having a local supplier can also position you to a true partnership. You can demonstrate the value of being a trusted partner and not just being an order taker. They can give you information regarding the situation in the manufacturing market in their region, and help you better anticipate the needs of your customers as well as act on the possible scenarios that may affect your business.
Negotiate product cost and terms of payment
Once you have managed your suppliers, you can approach your potential suppliers and ask them for RFI (Requesting for Information). This will help you know more about your potential partners to pre-qualify them base on their potential suitability for your business. You may also ask them RFQ (Requesting for Quotation) for you to study and compare with other potential suppliers.
After identifying your best partner for supplies, you can both revisit the offer and negotiate before signing the supply contract. You should be able to go over with the price, legal conditions, and delivery and return policies that you can both agree on as it is an important basis for your partnership.
Have performance tracker
After selecting the right supplier, prepare a track sheet wherein you can monitor the details, activities, and performances of your supplier. Consider the following details on your track sheet.
- Supplier’s Business Name
- Contact Number (Mobile and Telephone Nos.)
- Business Address
- Term of Contract
- Point of Person
- Frequency of Delivery
- Product Quality
- Changes of Product Price
- Supplier’s deals/ promos.
In this process of selecting the right supplier, make sure that you know what you need. You should not be tempted and easily captivated with sales pitches that do not match with your criteria.
Moreover, it is worth having if you have an alternative source of supply to help you with difficult situations, but do not buy from too many suppliers. It will be good with your finances and help you easily manage the supplies if you have a limited number of sources in hand. Starting your own business soon? Visit our blogs for more tips.