Optimising Procurement: Six Tips for Choosing Suppliers Wisely
In the dynamic realm of procurement, the task of selecting a reliable supplier is akin to navigating uncharted waters. When exploring new suppliers, many buyers are often lured by the prospect of securing the lowest price. However, fixating solely on cost-cutting measures can prove detrimental in the long run. Iris Fan, Procurement Director at Ample Solutions, delves into the crucial aspects that shape the decision-making process when it comes to supplier selection.
1. Corporate Reputation
Before we dive into anything, this is the first strategic step to take - evaluating a supplier's corporate reputation -involves a multifaceted approach. Seeking referrals, insights from industry peers, and online reviews to gain a comprehensive initial screening. Additionally, staying informed through industry publications, monitoring online, social media presence all contribute to a thorough evaluation. These avenues provide valuable insights into a supplier's financial stability, trustworthiness and their ability to align with industry standards.
2. Qualifications and Certifications
Securing a supplier with a solid foundation of qualifications is paramount. The emphasis lies on ISO certification, ensuring a commitment to global standards. Other things include operational licenses, which validate the supplier's legal authorisation to conduct business, ensuring compliance with local regulations and industry standards. Authorised certificates, on the other hand, provide tangible evidence of the supplier's adherence to specific quality, environmental, or safety standards.
According to a recent survey conducted by Thomasnet®, quality certifications ranked in the top six of all factors that B2B buyers use to evaluate suppliers.
3. Quality is Key
Before you decide to work with a supplier in the electronic component distribution especially, requesting product samples for testing, including label verification, is crucial. "At Ample Solutions, before we purchase from a new supplier, part of the quality assessment is to request for images of the labels, where we will send to our quality assurance team for verification against a database of original labels purchased from authorised distributors. This step helps to intercept 90% of nonconforming components, gatekeeping any potential threats," Iris Fan shares. Additionally, assessing the supplier's internal quality control processes, considering past performance and reviews, and their memberships with notable organisations like ERAI, also contribute to a holistic evaluation.
4. Price and Cost Transparency
Regardless of the claims of reputation or efficiency made by an electronic component supplier, the true measure of value lies in understanding the complete cost structure. Achieving desired profits can become challenging if hidden costs, such as shipping or undisclosed fees, come into play. An electronic component supplier offering seemingly too-good-to-be-true prices raises red flags about the quality of their products. Striking a balance between price and quality is not just desirable; it's essential. To navigate this delicate equilibrium, conducting market research by comparing prices from various electronic component suppliers becomes imperative. This approach helps gauge market pricing and assess if the offered quality or features align with the cost. If a supplier's pricing is unclear, or there are hidden costs lurking beneath the surface, it may not be conducive to the long-term interests of your business.
5. Order Fulfilment Capabilities
"Delivery capability goes beyond being a service; it embodies a commitment to order fulfilment," Iris Fan emphasises. Evaluating a supplier's track record in meeting delivery timelines accurately is crucial. Ensuring that a supplier consistently meets delivery commitments speaks volumes about their reliability, allowing your operations to proceed seamlessly without disruptions. The ability to adhere to promised timelines is indicative of a supplier's reliability, contributing significantly to the smooth functioning of your supply chain and overall business success.
6. Contract Terms and Conditions
Last but not least, the vital step of thoroughly reviewing every detail in supplier contracts. What is their lead time? What are their payment terms? This meticulous approach aims to establish a robust foundation for a transparent and mutually beneficial partnership. In the context of supplier selection, this thorough contract review ensures that the terms align with operational needs and broader business goals. This careful consideration of contract terms contributes significantly to the success of the supplier selection process, enabling businesses to forge collaborative and enduring relationships with their chosen suppliers.
In an industry marked by fluctuating demand and extended lead times, the importance of supplier selection cannot be emphasised enough. A deliberate and cooperative approach is essential, ensuring that each link in the distribution chain plays a role in fortifying the resilience and success of the entire industry. Hence, partnering with a company that follows a rigorous and systematic supplier selection process becomes vital, especially in the open market. At Ample Solutions, we have implemented a rigorous and scientific supplier grading system that encompasses our vast network of over 9,000 supplier partners. This system includes categorising suppliers into seven categories, which are then further segmented into 18 grades. The classification is based on factors such as attributed sales, order fulfillment records, and delivery punctuality. By doing so, we ensure that our procurement operations are not only fully traceable but also adhere to the highest standards of efficiency, speed, and quality.
To learn more about our Supply Management System, please email us at email@example.com.