Why You Should Be Qualifying Your Suppliers
Picking the right suppliers might be the most important decision you make on a daily basis. You want supplier partners that are good at more than just decorating the product. You want suppliers that have a core competency-and can do it better than anyone else in the industry. When selecting a supplier for an order, there are many factors that should go into your decision. If you stop at who gives the biggest rebate or has the shiniest new products, you are taking on more risk than you might imagine.
Two weeks ago, my post "Core Competency: Why It Matters" spoke to the importance of using suppliers that have a core competency in the product category you are buying from them. At that time, I promised to share some relatively simple ways to determine if this core competency exists and, perhaps more importantly, some ways you can qualify suppliers to ensure they meet your-and your customer's-standards.
One of the most obvious ways is to take a look at the supplier's product offering and ask questions that follow the simple principal: "It is very difficult to be good at everything." It's amazing what you can tell just by pausing in front of a tradeshow booth to get an overall view before you jump into the product frenzy so common at our industry tradeshows.
- Does the supplier specialize in one or two categories? Or does it have a soup-to-nuts product offering? The more categories the company has, the greater the likelihood that it is not good at some (or all) of them. Think of it like a great restaurant: The best typically specialize in one type of cuisine. You do not go to a steak house and expect to get good Sushi or Pasta dishes. There are too many differences in ingredients and preparation methods.
- Are the supplier's products generally manufactured the same way? Examples range from bag companies that specialize in cut-and-sew to office accessory companies that provide injection-molded plastic items. The supplier that has fewer manufacturing processes tends to have more expertise and will probably have stronger relationships with a fewer number of factories, which could give you better pricing and shorter production timelines.
- How does the supplier source merchandise? Does it have all the latest hot products regardless of category? If it does, most of the company's sourcing likely comes from one of the China product fairs, and there is less likelihood that the homework on product requirements has been done. However, if the company develops its own items, it is working closer with factories and knows the specifications for the products.
- What, if anything, can the supplier tell you about how the products are made? This is related to all the questions above, but the answer will give you more direct insight into how well the company understands its products. Do you want to do business with an expert? Or are you okay with the supplier practicing on you?
After you get a sense of whether or not the supplier has a product as a core competency, the next logical step is to further qualify the supplier to determine what, if any, transparency and control the company has of its supply chain. I touched on this topic in the previous post "Supply Chain Transparency and Control," which focused on a related principal: "You cannot have a meaningful relationship with everyone." Factories rarely do more than one or two different types of manufacturing. You will not find plush items and hand sanitizers being made in the same factory.