Choosing the right suppliers, whether for raw materials or finished products, can be a time-consuming, energy-draining and costly sourcing task. As inevitable as it is necessary, there are a lot of things to consider before diving into sourcing nitty-gritty – one of which is one’s ability to ask the right questions to prospective suppliers and vendors.
Asking the right questions, especially in this time of unprecedented global health and economic slump, will not only help a business through a downturn but also help streamline a company’s communication efforts and mitigate risks due to disruptions. It simplifies the selection process, and gives businesses an apples-to-apples view of each supplier’s capability and what it can offer. While many suppliers already provide company information and frequently asked questions (FAQs) on their page or third-party websites, it’s still best practice to communicate with them directly and confirm any information before inking any deal or partnership.
Here are the key questions you need to ask suppliers:
- Do you have a quality management system (QMS) in place?
More often than not, manufacturers would outright provide the information that they have certifications (ISO, OHSAS, IATF, etc.) and they comply with various international standards. Some companies have dedicated quality management officers who can provide the details of their policies, processes and procedures. Knowing that a supplier adopts a QMS and knowing the specific standards they follow would ensure that the products you are sourcing are of high quality and that you are dealing with a trustworthy supplier.
- What changes in your staff management, product delivery and infrastructure did you make during the pandemic?
Doing business in the time of the COVID-19 pandemic is not just risky but deeply uncertain. Those who decide to continue doing business should know what adjustments their prospective suppliers have made throughout the pandemic and whether they have a business continuity or disaster contingency plan in place to help them adjust their sourcing strategies as well. Knowing the changes such as the supplier’s ability to operate effectively and efficiently on a scaled down basis, upgrades or downgrades on the IT system or equipment, and delivery and inventory strategies helps buyers determine a supplier’s capability to handle typical functions on unprecedented situations.
- What is your scope of service?
Some suppliers offer one-stop services, other are capable of handling OEM and ODM requests, and there are also those that provide their own brands. There are also suppliers that handle R&D and QC in-house, while some sub-contract other services. Depending on a buyer’s needs, knowing the extent of services a supplier provides will help buyers make an economic decision.
- What communication systems do you use?
In business, communication is everything. It is not only important to get a quick response from a supplier but more importantly, it’s crucial to know if they have flexible communication systems in place? Do they have a dedicated staff for answering your queries or are they outsourcing their customer service? Can they be contacted easily through social media apps, do they use chatbots or do they just strictly communicate via calls and e-mails? Should problems arise, it is important to be able to contact suppliers whatever their mode of communication is.
- Do you have a minimum order? Is it negotiable?
Depending on the products they offer, most suppliers already provide details about their minimum order requirements in their websites, but it helps to know whether these are still up for negotiations or not. Knowing the minimum order quantity helps buyers manage their flow of income and ensures they can order enough products in the future.
- What are your payment terms and are they negotiable? Do you offer volume discounts?
Many suppliers offer credit terms between 15 and 90 days, depending on the industry or product. Some suppliers are willing to extend payment dues, while others provide discounts or special deals when you pay in advance, 100 percent upfront or reach a certain amount or volume of orders. Depending on the financial capability, payment term is something that a buyer should definitely ask a prospective supplier.
- What are my total costs?
In connection with knowing the payment terms, it is also important to clarify with a supplier the total costs that will be incurred. While suppliers may provide a quotation, it is important to get a complete list of other fees and charges that the transaction will incur.
- What happens if products arrive damaged, late or don’t arrive at all?
In the event that the orders arrive beyond the time agreed upon or worse, they don’t arrive at all or are defective upon receipt, does the supplier offer any form of insurance, refund, or compensation for damage or loss? Do they follow shipping, common carrier or other transport and commerce laws and regulations? How is the refund process, if there’s any? Knowing these in advance will save buyers the time, cost and hassle of filing complaints and claiming for damage or loss in the event that an unfortunate incident happens, and avoid shady or non-compliant suppliers.
- Do you employ sustainable production methods?
Although often overlooked and ignored, sustainability in an important economic development principle that all organizations and businesses must adhere to. Are suppliers employing ethical business practices? Are their production methods, procurement procedures and waste management systems sustainable and environmentally friendly? A supplier’s environmental impact is a reflection of how they manage their overall business.
(Article courtesy of GlobalSources.com)
The Importer’s Guide: Product Quality Control is a walk-through of the inspection process and discusses the steps and options available to companies sourcing products overseas. It covers the types of quality inspections and their requirements, a sample checklist, and industry- and country-specific standards on materials, products and manufacturing. The book also shares tips on how to resolve post-shipment disputes.