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Evaluating Your Suppliers and Vendors

As you begin thinking about budgets and plans for 2012, it’s the perfect time to re-evaluate your relationships with your suppliers and vendors.

ClipboardThis article by Rachel Hochhauser for Inc. proposes three questions every small business owner should ask themselves about their supplier relationships:

  1. Are the lines of communication open? Especially in these financially unstable times, proactive communication with your suppliers along with regular audits is more important than ever. Your suppliers should also be eager to check in with you.
  2. Are they reliable? Purchasing research from a third party such as Dun & Bradstreet or Equifax can give you information on your current suppliers. Independent customer referrals and a trial run are great ways to evaulate a new vendor.
  3. If my business grows, will they be able to support me? Will working with a certain supplier become easier or more difficult? Are they investing in technology and innovation? Will you be able to leverage your buying volume to get better pricing?

Need more specific tips for evaluating your vendors? Try the seven steps outlined in this article by Carolyn M. Brown, also for Inc.:

  1. Establish Performance Indicators (your Tribute or TrulinX software can help with this)
  2. Classify Multiple Suppliers and Vendors
  3. Devise an Evaluation Method
  4. Determine Who's Calling the Shots
  5. Maintain Good Relationships
  6. Decide When to Issue a Red Flag
  7. Cut Loose Weak Links

You may also find these earlier blog posts helpful:

Building a Vendor Report Card

What is the future of manufacturer / distributor working relationships?

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