6 Quick Tips for Identifying Top-tier Supply Chain Sources
The fastest way to waste business resources is to invest time and money into poor-quality vendors. You need every link in your supply chain to be strong, and that means you need to put effort into identifying sources of materials or services that you can trust. Though every organization and leader will develop their own system for searching for and investigating supply chain partners, here are a few quick ways to filter out the worst options and prioritize the best sources to add to your supply chain:
For decades, large organizations have strived to build a global supply chain, but recently, the disadvantages of having suppliers and manufacturers in disparate locations have become more obvious. The varying national responses to the COVID pandemic as well as regional national disasters have caused seemingly unending supply chain disruptions that devastated business operations. Thus, many organizations are pivoting to regional and localized supply chain models to ensure greater stability in the shipment of goods.
Before you settle on a supplier, you must consider how their location might impact your supply chain. Suppliers in different companies might offer lower production costs, but if you must pay the difference to ship your goods to your markets, you might opt instead for suppliers closer to your products’ ultimate destinations.
Suppliers can earn certain certifications by adhering to certain operational standards or achieving a certain level of quality in their output. You might perform some research to determine which certifications will identify standards that align with your organization’s needs and values.
Certified suppliers might charge more for their services — but not all certifications are legitimate. You should ask potential sources for information about any certifications they might maintain, and you should double-check the legitimacy of those certifications with the endorsing bodies that provide them.
You want to work with a supplier who has experience using the materials and processes you are interested in using to produce the goods your business uses. Expertise helps a supplier avoid costly mistakes that could delay deliveries and generate quality issues in the final product. Additionally, working with a more knowledgeable supplier can give you access to valuable insights about your market, leading to mutual success.
However, some unscrupulous suppliers will claim to have experience with the expectation of learning on your dime. You should try to find evidence of a supplier’s expertise in desired fields and perhaps interview them to better understand the strengths and weaknesses they maintain in their knowledge and skill.
A supplier that cannot fulfill your entire order is not a useful member of your supply chain. Though some organizations develop supply chain models that take advantage of a large number of smaller suppliers located in different regions, each supplier is expected to complete their full order on time and to quality standards. You might investigate the resources of each source to determine whether they have the capacity to meet your needs. If most suppliers fall short of your expectations, you may need to revisit your sourcing and procurement strategy.
Evaluate Politics, Environment and More
As mentioned above, there is some risk associated with partnering with suppliers in different geopolitical environments. Sources in regions that have unstable politics may suffer disruptions due to shifting laws, trade relations or labor disputes. Similarly, some regions are more grievously impacted by the ongoing climate crisis, experiencing catastrophic natural events and emergencies with increasing frequency. You might consider whether your sources are located in areas that are more likely to be affected by these uncontrollable factors and how that might impact your supply chain in the future.
Developing a relationship with a supplier requires resources from your business, and you do not want that time, effort and money to go to waste. Unfortunately, as businesses themselves, suppliers can succumb to failure. If a supplier seems financially overextended, they are more likely to fold, leaving you scrambling for another supply chain solution. Thus, you should try to determine the financial health of your potential sources before investing in them.
Once you settle on the suppliers you want to add to your supply chain, you should utilize a source-to-contract service to capture more value through the onboarding process. Then, you can begin working with your high-quality suppliers and build the business of your dreams.