- April 2, 2020
- Posted by: AQI Service
- Category: Product Sourcing
The purchasing function is considered a crucial area that can intensely impact the profit and loss of a manufacturing organization. Though the company’s in-house necessity commences the purchasing activities, these activities turn into the execution stage by selecting the best suppliers from whom materials will be purchased. Supplier selection is a very intrinsic part of supply chain management.
Why does the Supplier Selection Important to Business?
Working with the potential best suppliers is essential for your enterprise, particularly when you are purchasing items that are crucial to its operation. , or involve a high degree of supply risk or expenditure.
There are several reasons for which every company around the globe endeavors to find out best suppliers, in terms of different factors such as supply quality, availability, supplier responsiveness, cost targets, etc., for every particular item. If you can’t reduce your purchasing price from your raw material, you won’t be able to make a profit by selling your products at higher rates in this competitive market. Your competitors might have a plan to offer a discount to surge in his revenues due to find a solution to manufacture the same product cheaply.
What to Consider While Selecting a Supplier
While selecting suppliers, the first consideration is the number of suppliers that will supply the product or service. If you want to develop productive Supplier Relationship Management, you have to know how to identify such suppliers and assess their relative capabilities. Besides, the degree of motivation of a supplier to do business with your company also perpetuates long term relations.
Different organizations adopt different approaches to select the best suppliers who can provide the required goods or services at a competitive price, ensuring the highest quality. Nevertheless, a few aspects are very crucial, and every supplier must possess these characteristics.
- Specifications: Your first and obvious concerns here is whether or not the supplier is producing – or can produce the goods or services by following your required specifications. Does the item do what it is supposed to do?
- Quality: You must consider the quality of products or services that you will be receiving from your vendors while enlisting them. Your failure to buy qualitative products poses a threat to your existence in the market.
- Price: Of course, it goes without saying that you can’t avoid price issue when you opt to buy anything from anybody. Subsequently, your mustache for the cheapest rate at the desired quality, whether it is a raw material or capital machinery.
- Reliability: Apart from price and quality, every buyer should count how much reliable the source is, before burgeoning business relationship. It is always recommended to buy from a trusted source even at a higher price. (Related: Factory Audit Service)
- Financial security: Perhaps, this is something that most people skip out at the beginning, but, feel the importance in the middle of business. Thus, it is always advised to scrutinize the seller’s financial stability before signing off on a contract.
- Expertise: Your supplier is not only a source of your needs but also one of your business partners. Your supplier may help you to save money by customizing your requirements, which is unimaginable to you. You cannot expect this unless they are experts in their field.
- The validity of Certification: Admittedly, this is very difficult to verify your suppliers’ official documents i.e., business license, export license, certificates, and certifications from other parts of the world. But, this paper should be verified and validated before starting any transaction. If you want to enlist any Chinese company, you can contact any third party agency for reliable results.
Difference Approaches to Identify Best Suppliers
Here are three basic ways to identify the best suppliers
- The “wait and see” approach
-The simplest way of identifying suppliers. It can happen frequently. Suppliers and their sales staff are constantly on the move. They compete with each other and seek in many ways to achieve a surge in their market shares. You might be tempted to sit back and wait. After all, with all of those people coming around one after another, you are sure to have plenty of choices.
Besides, with globalization and an increasingly complex trading world, you cannot afford just to be reactive in sourcing your purchase. You must be proactive in every possible way and searching for new sources of supply.
It is true that those suppliers that contact you spontaneously offer an advantage because they are likely to be hungry for your business. They have made an effort to find you and to come to your way.
- The “attract and see” approach
-Inviting your suppliers to contact you to bid through advertisements such as websites, newspapers, or even third-party. In publishing your needs in this manner, it is important to do as competently and professionally as possible. If you wish to attract suppliers, you must be able to attract the best. Your website will be a window that your company offers to the outside world. It will create a first impression, and the first impressions always last. However, you will have to be careful in discriminating amongst those who respond to your call.
- The “seek and find” approach
-Another way to start is through supply market analysis to identify and assess potential supply markets, their risks, and their opportunities. You must use all the means at your disposal to locate and contact potentially valuable suppliers. Experts opine that professional buyers not only wait for the supplier to arrive, but also take the initiative themselves to find which are the best.
It is undoubtedly important to identify a satisfactory range of potential suppliers, depending on the purchase requirement that needs to be met. If you come up with too few, you will miss the opportunity for competition amongst suppliers. If you come up with too many, you will spend too much time and effort in the appraisal process. As a result, choosing a third-party like AQI Service, who is an expert in supplier selection, might be a suitable solution to trade off this matter.
More Tips to Find good suppliers in China
Author: AQI Service as a professional quality control service company in China specialized to provide a complete range of quality inspection and testing certification services in China & Asia for global importers, buyers, retailers, and sellers.
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