If you're unhappy with a current supplier, it may be time to move on. But before you begin your search, you should prepare yourself by thinking about the best questions to ask suppliers. While you will likely have specific concerns based on your industry, there are certain key issues that every business owner should address with a potential vendor or raw material supplier before signing a contract. Based on the answers you receive, you should be able to select the suppliers that will be the best fit for your business.
Here are seven important questions to ask suppliers:
1. How well do you know my industry?
Upon making first contact with your company, a quality vendor should take the time to research your business and industry. That way, they can make it clear to you that they understand your specific needs and challenges.
2. Have you worked with companies similar to mine in the past?
Suppliers who have worked with similar businesses may be willing to share references that support their claims that they are knowledgeable about your specific industry. Their experience working with similar companies may give them an even deeper understanding of your business needs and priorities, which may help ensure that your business exchanges go more smoothly.
3. What will my total expenses look like?
It is also important for you to determine whether you could potentially be charged any additional fees that go beyond the cost of the raw materials or products you need for your business. A first-rate supplier should gladly point out any line items in the contract, such as restocking charges or delivery fees.
4. Are your payment terms flexible?
Typically, invoices are due within 30 days, but a vendor that's interested in working with a startup or small business might be amenable to extending the due date to 60 or 90 days. Alternatively, you may be able to get a discount by agreeing to pay in advance. It's best to have all of this payment information before you sign a contract.
5. What conditions would prompt a price increase?
It's fair for you to ask a supplier if they have a policy of regular price increases and how much advance notice you would receive as their client. The goal here is to establish a vendor relationship in which there are no (or few) surprises. The supplier might also offer some form of volume rebate or discount.
6. Do you have liability insurance?
A reputable vendor will give you written proof of liability insurance coverage for any parts or product malfunctions. Down the line, you may need to rely on this coverage.
7. Will I have a designated contact person in your company?
Beware of vendor candidates who promise that anyone in their company can answer your call. In virtually all circumstances, it's more advantageous to you to have a single point of contact, someone with whom you can build a relationship and rely on to address any issues that might arise. When a delivery shipment is late or gets canceled without notice, the last thing you want is to have to chase someone down to get an explanation.
The best suppliers understand how much their clients rely on them, and so they are committed to doing everything they can to support their businesses. Do your current suppliers make the grade?
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