Make a list and check it twice – this festive suggestion applies to your supply chains too. My name is Naomi Burgess and I’m going to tell you why and how you should check your suppliers and have back-up plans in case something goes wrong.
It’s tempting to skip the back-up plan for suppliers altogether because of the additional resources required for finding them. However, you would be likely to lose much more if something goes wrong with your current suppliers. Having a plan B for various channels is one of the elements of a successful supply chain strategy for any business.
However, a back-up plan might not always be sufficient. For example, in cases of urgent delivery of supplies, if your current supplier misses the deadline, having a back-up one won’t so much good. You would lose the profits you could’ve gained and might even have to pay more to the back-up supplier for extra fast delivery.
Be Ready and Gather Data’s
The solution to the above issue is proper due diligence. Making sure that you have all the information about the supplier – their terms and conditions, their tariffs, and whether they’re legitimate, so to speak – is only the tip of the iceberg. Look the organisation up online, mead their industry reviews, get references from their customers or even better talk to them directly; to be honest, anyone can leave a review on a website and there’s unfortunately no easy way of telling what’s legitimate on the Internet. The more information you have on suppliers, the more secure you are and the easier it is for you to make a decision about whether or not to work with them.
Playing Safe with Suppliers
However, no references can accurately predict how well a supplier would work with you. For that reason, I recommend that you hire all your suppliers on an initial trial basis. After you interview them and receive all the references, make them an offer to work for you for a trial period; their acceptance or rejection of such an offer can also be quite telling. You’ve probably discussed potential problem scenarios during the interview process, but it would also be a good idea to run through a mock problem to test the supplier’s abilities and how well they would work with you. It’s always better to fail during a mock trial which costs you very little than to fail to perform during a real job which could cost you a lot of money. It’s also in your supplier’s interests to agree to a trial period really – failure to meet your expectations during a real order can be a much bigger blow to their reputation than if they’d failed during a mock problem.
Even if the supplier has proven themselves to be reliable and your working relationship has started off perfectly, it doesn’t mean that you shouldn’t be cautious. Carefully monitor the supplier’s track record as your relationship progresses; if everything is going smoothly, that’s great. I’d advise to initially enter into separate contracts for each transaction, and once you’ve monitored the organisation’s performance indicators over some time, consider entering into a partnership agreement for a long-term relationship. This agreement should be a result of the supplier’s excellent service and the value for money that they offer. Consider all the advantages and drawbacks of working with them on a continuous basis – would it be more cost-effective to enter into the partnership agreement or would you save more by operating on the basis of different service contracts for each transaction? Can your supplier meet your expectations better on the basis of a partnership agreement or would you be more satisfied with one-off deliveries? All these things, and others, must be carefully considered before making a decision to enter into a partnership agreement.
Partnership is give and take
Once you’re in a partnership agreement, your relationship becomes more of a two-way street – now that you and the organisation are partners, you both need to benefit equally from the relationship. While the supplier’s task is to perform their obligations as well as they used to, if not better, your job is to make sure they’re motivated to offer excellent service on a continuous basis. This is why I suggested all the above measures you should take when hiring a supplier – you need to set a precedent for them on how to work with you during those times that would later be reflected in your partnership.