Finding and selecting suppliers
Follow these steps to find a supplier that suits your business needs:
- Make a shortlist of companies and rate their services against your priorities – quality, reliability, returns policy, price, location, terms.
- Talk with the sales representatives to check out if they're knowledgeable about their products, and will keep you updated regularly about new and deleted models.
- Use industry databases and association websites to find lists of local suppliers – including the Industry Capability Network.
- Get personal recommendations from other business owners – members of our Facebook group I am a business owner in Victoria are always willing to give recommendations.
- Do a credit and trade references check – including searching the Personal Property Securities Register (PPSR). Note that if the supplier has a large number of PPSR listings, this could indicate the goods they sell are on consignment, the goods have been provided with credit from their suppliers, or the business has substantial debt payable within 12 months relating to plant and equipment.
- Negotiate delivery charges, times and – if possible – delivery when required, called 'just-in-time (JIT).
- Regularly monitor the selected supplier(s) against your priorities – as your business, and the supplier's business grows, often the priorities change.
If you chose one main supplier, be sure you have an agreement in place with another supplier just in case your main supplier can't provide the agreed service in time.
Having one supplier can offer you the benefit of bulk buy discounts and personalised service. However, the benefit of two or more suppliers means you can compare trade prices and offer your customers a wider stock choice.
Maintaining supplier relationships
After you've started ordering from your supplier, it's important to keep your relationship positive. A good relationship helps you maintain stock flow and stay up-to-date with new products and offers.
Keep your relationship positive with suppliers by:
- having regular contact with them to discuss the progress of your business – they often might be able to assist with increased credit terms, new products, etc
- always paying your invoices by the agreed payment terms
- making sure there are processes in place when suppliers are not paid on time – such as providing a contact name and details so the supplier can discuss the situation
- communicating any late payments with the supplier, and setting up an agreed payment plan – summarise this agreement in writing and ensure the senior finance person, or owner receives a copy