Vendor selection criteria: Choose the right vendor

Pricing is what decides the value, the worth you get for the money spent. The goal here is not to get the lowest bid possible, but to obtain the highest value for the agreed price.

Don’t fall for suppliers who quote much lesser than the market price. It can underline only two things, low-quality goods, and unmentioned terms and conditions that can surge the bill. 

Building a strong vendor network can help reduce costs for businesses by fostering healthy competition, leading to better pricing and terms from a variety of vendors, thus providing more flexibility in decision-making.

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 here.

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, dig out negative and dissatisfied customer reviews.

Customer service has a crucial role when it comes to an issue with their product/service. They act as the frontrunners and pass the updates between you and the vendor during these occasions. If they don’t have a designated customer service team or aren’t in ideal working condition, think twice before making a step.

Product/service quality invariably stands out amongst all as this is tangible. If it’s a product, check their samples before choosing the vendor. If it’s a service, inquire if the employees are well-trained and what training they went through.

Some standards have to be met by the employees who render the service. Check if they do. Pricing is obsolete if the product quality doesn’t meet your expectations.

Businesses have begun to understand the need for modifications or improvements in their product lines, if a customer demands it. Not understanding your needs entirely and unyielding to change will only bring one customer down for them. Inspect if your vendor is flexible enough to work past their mundane strategies.

A customer vendor relationship can flourish into a more win-win partnership opportunity. Like how you prefer buying from one of your loyal, regular customers, your vendor might also show likeliness towards your products/services. Don’t leave any questions hanging in the air, when you can establish a barter relationship with your vendors or customers.

You can understand a customer’s experience with a product through the product’s testimonials. Don’t just rely on their website. Check on review sites and networking groups to know the general opinion about their products.

Businesses thrive on word of mouth. Check with your network to see if you can find any information about the vendors. Also, contact the list of references the vendor has provided.

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.

Check how long it takes to fulfill the order from the date it is placed and how many instances per week or month you can request for consignments. Maintain delivery and shipping notes in the vendor management system. If the order has to be shipped, check shipping obligations from both sides.

It’s luck by chance to come across suppliers who share similar values and business principles. When you partner with such vendors, it’s indeed going to be smooth sailing throughout, and there would be low instances where miscommunication or mishap happen. You can quickly bring each other to the same page and maintain this synchronicity throughout.

Selecting suppliers that share your values is essential, but negotiation plays a key role too. Check out our article on how to negotiate with vendors for practical insights and strategies.

When facing challenges with vendor management, it's crucial to raise your voice. Make sure your opinions are heard and validated. When you stay quiet during such instances, even a tiny tiff can turn into a big collapse until one of you call it quits.

Communication can be in the form of emails, newsletters, virtual or physical meetings, phone calls. And when they initiate the conversation, acknowledge and respond at the earliest. Feedback or complaints, shoot them right away and help them grow.

Earn their respect and regards by paying on or before time. When suppliers receive payment on time, they can close their accounts right away, rather than wait till the next cycle.

Process invoices as soon as they come in. For seamless processing, use a vendor management system. This software will automatically read the invoice, fill in the data, and let you approve and pay. Scheduling payments is possible in supplier management software too.

A partner always holds a step above the vendors, given the value they bring in. Vendors aren’t given the same priorities and considerations, as it’s treated only as a buyer-supplier relationship.

Cross the bridge and start treating your vendors as partners, as they are an indispensable part of your day-to-day operations. Taking this step can secure your vendor relationships at any time.

It’s a general assumption in the business world that clients don't think twice before switching to another vendor when they hear better deals. There cannot be any other destructive way than this to knock down vendor relationships.

Are you expecting more rewards? Your vendors do too. Return the value and balance they bring you by being loyal to them. Tottering away from one to another is a big no for robust vendor management. Instead, consider how to automate vendor management processes to strengthen relationships and enhance loyalty, ensuring that both you and your vendors benefit from a lasting partnership.

Be their indirect marketing partner and refer them to your circle. If they have referral or partnership systems, join them and share a word with your other vendors and clients. Appreciate their milestones and achievements on social media and share your online presence with them.

After all, it’s a kind gesture that will surely win your vendors’ hearts. It works the other way too. You can also request referrals and ask them to introduce you to key people/companies they know.

No is a powerful word that can carry an intense message when used in business conversations. When your supplier asks for a favor, you cannot promise, politely refuse and explain why. It’s common to hear ‘No’ as a response from vendors during negotiations.

If they have a solid backup on why it’s impossible to reduce costs, understand their perspective and stay professional rather than push them more. Vendor relationship management can only flourish, when you both work together and understand each other.