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7 Questions Every Procurement Director Should Ask Suppliers

Posted by Richard Hardstaff on Mar 1, 2018 10:30:52 AM

Building Strong Supplier Relationships in Procurement

Finding the perfect supplier is difficult. With so many options and each one providing something slightly different, how do you decide if a supplier is right for you?

Well to help, our experts have put together a list of the seven top questions procurement directors should ask to ensure they chose the perfect supply partner and generate value across the supply chain.

1. What Experience Do You Bring to the Table?

If you are taking the initiative to find a new supplier, it’s likely that you have taken the time to thoroughly research the product you wish to source, and you already know specific requirements and the corresponding price desired.

In the future though, you may not have the time to conduct this in-depth product research so it is a major benefit when you have the confidence that your supplier has the requisite expertise to provide the most cost-effective, quickest and highest-quality solution to meet your needs.

With that in mind, try to engage with suppliers who are specialists in the products you are sourcing from them. Asking them directly about their company expertise and the expertise of your contact is the simplest approach.

When discussing your order with specialist suppliers, you should find that they have their own recommendations to improve the quality, cost and efficiency of the order. It is this expertise that you will need to call on to build a strong and lasting supplier relationship.

2. Can You Meet My Future Procurement Needs?

Ensuring your potential supplier can meet your needs should go without saying. The important part is to identify whether your prospective supplier can meet your needs over time as your business continues to grow and your demands change.

Determine what their capacity is and how close your order takes you to meeting it. This information is best requested in the tendering process by requesting it as part of your order specification.. Remember, there will be instances where you have to make orders last minute or purchase a higher quantity, so your supplier needs to be able provide flexibility and accommodate this, without it impacting on deadlines.

If a supplier can’t provide everything you need, it is unlikely they will be an effective part of your procurement strategy. Even if you make initial savings by switching supplier, these savings could be lost down the line as a result of having to coordinate multiple suppliers.

3. How Easy is it to Order?

The key to cutting costs in your supply chain is reducing the time wasted on making orders, processing invoices, and managing other indirect costs. Anything that can save you time also saves you money, so ensuring your supplier has an easy-to-use, quick ordering process is crucial.

Currently, 83% of companies are not taking advantage of the full potential of digital procurement, resulting in procurement strategies that are not working to their maximum efficiency.

Make sure you’re one of the businesses reaping the rewards by asking the prospective supplier about the software they offer. Having access to a digital platform through which you can make new orders and review previous purchases is a vital for streamlining and having full control of your supply chain.  Technology will save you time, money and should also provide the data and analysis to help you make better purchasing decisions for the future.

Any online platform should also include analytics on your orders, so you can better plan future orders (although this requires a ‘yes’ to the next two questions).

4. Can You Store My Stock?

Okay, so you have found a supplier that meets all your needs for a great price and has the industry expertise you need – does that mean they are right for you?

Well, it might do if you are ordering low quantities, but for any businesses sourcing more than a back room’s worth of stock, you’ll need a place to store it.

As we know, consolidating your supply chain is the key to cutting costs, and this means more than just reducing the number of suppliers who produce your product. Finding a single supplier that can store your stock saves you from sourcing your own storage and ensures you don’t end up paying for any empty space.

Further, suppliers with stock management software can analyse how it is used and help you plan future orders accordingly. And, by keeping better track of what stock you have where, you can work to ensure your stock is not wasted, saving your business money in the process.

5. Do You Have a Smart Distribution System?

As with storage, finding a supplier who can deliver your stock to specific locations forms part of a logistics strategy that will save you time and money.

By having a single distributor, you can sync your delivery dates, improve efficiency and, best of all, create a responsive system. This means that you no longer have to split your products into equal chunks and hope that everything is used. You can distribute varying levels of stock to different locations in response to level of need, helping to reduce waste.

Demanding a smart distribution system from your key suppliers is highly recommended. The smart part of this distribution is that the data analysis of movement of stock can be automated using a cloud-based digital platform, providing your with growing details of where your purchases are best used with minimal effort.

Alongside this, smart distribution applied properly will ensure that deliveries are efficient and only completed when required - resulting in overall fewer deliveries and reduced costs. This is also relevant to the next question you should be asking….

6. Do You Share Our Sustainability Goals?

A key factor that can be easily forgotten is asking a potential supplier about their sustainability policies. A business’s suppliers reflect on them, and as such, you want to ensure that suppliers hold the same ethical values as you do. When making the effort to lower your business’s carbon footprint, ascertain whether a potential supplier shares the same sustainability goals.

If a potential supplier’s sustainability goals do not align with your own, they may damage the credibility of your supply chain, and, more alarmingly, cause harm to your company’s reputation. When choosing a new supplier, always look for guarantees of their dedication to sustainability, such as the ISO14001 environmental accreditation from the International Organization for Standardization (ISO).

7. Can You Beat My Current Supplier on Price?

It’s no real surprise that more than half of procurement professionals consider cost savings as their top priority – we’re sure you’ll agree with this one. This begs the question then, why have we left it until the end?

The reason is because the cheapest option is not always the best one.

If your supplier can provide great answers to the first six questions, then the price differential needs to be considered alongside this. In these cases, you must consider what is better for your procurement strategy – short-term savings or long-term gains and efficiencies?

We look at it this way. You wouldn’t by a TV that has a poor picture, tinny sound and only lasts for a year, when you could spend a little bit more and get a great piece of kit that lasts for five.

Choosing a supplier is, like anything, an investment – so the price point should never be your only consideration.

Similarly, it’s not unwarranted to expect any new supplier to be able to beat or at least match your current provider. But, it’s important not to forget to whether the price on the table will be sustainable. Will you still be on such as good deal further down the line?

As you make your way through the other questions on this list, weigh up the return on investment a supplier is offering. This is the only way to ensure you get the complete service for the right price.

(That being said, if all your questions are answered positively including price, then what are you waiting for!)

With these seven questions, you should be well on the way to identifying the perfect supplier for you.

Supplier selection is just one aspect of exceptional procurement though. Our free eBook, The 4 Stages of Procurement Savings, digs into the details of how to cut costs while also maintaining quality. Download below!

Download our guide to procurement savings

Topics: Procurement Strategy, Supplier Relationships