Vendor selection is critical to decide who you will partner up with, while supporting business production and operations. Due to this weightage of responsibilities and undermining risks, selecting the vendor requires prudent decision-making. The vendor selection process is tricky, and you have to go through multiple profiles and proposals at once. To maximize the return on investment and not waste the efforts put forth to select the vendor, choosing the right vendor becomes fundamental. Here are some ways in which you can select the right vendors, especially now, in the midst of a crisis.
Look for the best price
Your goal should always be to get the maximum value for the lowest possible cost. To be assured that you are getting the best deal, you need to ask for more than one bid. Be wary of vendors who submit estimates far lower than others. You may receive less than acceptable products or services. Or, you may end up paying more than the estimated cost in fees that weren’t part of the quote originally. Communicate to prospects the full extent of your needs so you receive an accurate bid.
What is their business presence like?
How long they have been in the business world indirectly denotes their first-hand experience and reputation. You can check your vendor portfolio and related projects easily. Checking out their existence duration doesn’t mean that new companies aren’t worth pursuing, as it depends on the kind of work you expect. Check their online reviews and online presence. Also, look for negative and dissatisfied customer reviews.
Take steps to mitigate risks
While risk profiles should be assigned to all suppliers, or at minimum to critical ones, pay careful attention to businesses at financial risk, including mid-sized or large suppliers. They may look successful even as they struggle. Pay attention to economic trends, industry reports, company financial results and other market related issues. Be sure that your prime suppliers are well aware of the stressors in their extended supply chains. Ask to see detailed analyses and be prepared to make changes to mitigate potential or actual risk.
Sustainability and financial stability
It will take months to stabilize, when one of your vendors backs out due to a lack of funds. Verify their financial sources and check their ex records too. See if they had any instances where they couldn’t pay financial liabilities on time, or had to get financial assistance. Check if they can continuously cater to your supply requirements and scale up if needed. Especially now as we struggle through an unprecedented economic crisis, it is essential that you have strong vendors who can keep up their commitment to you.
These are a handful of methods in which you can ensure that you choose the right vendors for your business carefully, so that you gain the maximum benefits from doing business with them.
