Episode 6 – 5th Key Factor – The Right Suppliers
In conjunction with your other survival strategies, reviewing your supplier list is essential. Like any other business input, you need a level of comfort that the suppliers will do the right thing by your business.
Accordingly, the two most important factors you need to cover are due diligence and your suppliers’ flexibility with delivery and payment options.
Completing due diligence on your suppliers will be more important than ever before. Operating a business in the future will become far more complex than just buying the right product or service. Today, there is the social element, commitment to quality, operating ethically, plus government regulations and legislative factors to consider. These factors and the advent of social media have added a complexity to operating a business not seen in the past. Just because we are heading into a recession, you cannot afford to neglect these issues if you wish to survive for the long term.
Obviously the first place to start the due diligence process is with reputation. For instance, does your own business have a good reputation? The factors of concern will be whether your business pays on time, have good communication channels with its suppliers and raise valid credit claims, or ones which are designed to delay payments. In other words, is your business a good customer?
In the case of the supplier, what does your due diligence reveal about their ability to be a valued supplier, or are they going to be a costly nightmare to deal with in the future. In the future, due diligence on your suppliers will be essential, after all, nothing will be the same. It would be foolish to believe otherwise.
In completing your due diligence exercise the following questions, amongst others, are worth asking for any new supplier or when existing suppliers stop supplying goods and services as expected.
What is the reputation of your supplier’s management, employees and directors?
Where does the supplier obtain their goods from and/or their service providers?
Equally important, is the supplier willing to provide information on their suppliers and confirm the quality of the goods and services supplied?
Will the goods and services be delivered in a timely manner or as required?
Can the supplier be relied upon to deliver special orders if required?
Does the supplier have a policy of helping your business by allowing agreed part payments over a period to help your business with a special contract or project?
If goods and services cannot be supplied as required, is the supplier upfront about their inability to deliver the goods and services?
As we enter a recession, you need to have some comfort that your business will be supplied with the goods and services required to stay in business. Furthermore, you will want to try and ensure that the products you order are sourced from reputable suppliers. Currently how you operate your business is more important than ever before as it will be scrutinised by the general public. It is wise to remember, there are no secrets anymore and you do need to be on your best behaviour, if you wish to survive in the long term.