Supplier On-boarding is a strategic initiative and must be planned well to bring out the best results for the organization. Every supplier has to be carefully reviewed before bringing him on board. A long and fruitful relationship with suppliers is helpful in bringing better growth and stability to business.
Here is a checklist that will help improve the process and bring on-board the right set of suppliers.
- Knowing and finding out the reputation of the supplier is very important. Talk to sources in the industry to know more about the delivery period and quality. Compare these with business expectations. Getting the supplier to work for you will require a thorough background check.
- You must evaluate the financial health of the supplier. This is useful in knowing the long term stability of his business and the capability to supply on a long term basis.
- Meeting your supplier makes you know more about him. Understand if the supplier is planning short term changes like factory maintenance etc. which may cause temporary supply bottlenecks.
- Check for all sorts of safety parameters in the supplier factory before signing up.
- Ask for samples of the product to evaluate product quality and usability. Make sure the quality is as per the defined standards.
- Analyze plant capacity of the supplier carefully. Study it with reference to your requirements and the possibilities of growth in the future.
- Talk to your suppliers for long term contracts by studying the price-rise trends in the industry. Hedge for any sort of price fluctuations with the helps of appropriate contacts.
- Understand all the aspects of shipping along with costs and possible reasons for delays.
- Carefully look in to the material being used in the production process. Also understand the possibility of unwanted raw material being used by the supplier. Make sure you make your terms and conditions absolutely clear.
- Check if the supplier is following all legal parameters with respect to production and hiring of staff. This is important from the perspective of stability and a long term relationship.
- Have an optional supplier in place. Makes sure, you have a backup, to ensure that there is constant supply of goods.
- Research the suitability of the region for the production of goods. Understand the possibility of any sort of economic or political instability or of natural disasters. make sure you hedge for such factors in advance. Evaluate options of insurance of goods beforehand.
- Meet and talk to the suppliers personally to understand their vision about their production capabilities and business. Get to know them better.
- Make sure you are not working with the same vendor who did not fulfil his commitments in the past.
- The supplier must integrate with your system to send online invoices and receive payments online.
- Make sure you have defined the key criteria of performance for your supplier before he comes on board. The reporting methodologies must be put in place to understand the performance of each supplier in a given period.
A careful supplier on-boarding is useful in making sure that the relationship is fruitful and beneficial to all. Using the right set of tools and technologies makes the process smooth and more efficient.
