Key Considerations in Sourcing from Suppliers | DCR Workforce Blog

Key Considerations in Sourcing from Suppliers

workforce managementThere are quite a few similarities between the sales process and courtship. During courtship, people are on their best behavior and present their best aspects to create a highly favorable impression. This may or may not be sustained as the relationship progresses, and all too often complete disillusionment follows.

To keep this disillusionment stage at bay, then the sellers must work hard to fulfill the promises they made to secure the contract while the buyers will have to put processes in place to make sure that the sellers deliver on their promises.

What the buyers can do before the contract is signed is what we wish to discuss here, with specific reference to sourcing from suppliers: whether it is people, material or services.

  • Fully leverage one’s bargaining power, which would be lost after this stage, before making any selection.  Involve all internal stakeholders to ensure that all requirements are clearly specified up front, and that expectations are properly set as to what will be delivered. .
  • While a supplier’s financial stability is considered to be of high importance, this has to be necessarily juxtaposed against the capabilities of the supplier as well as the competency to deliver against the requirements of the job. Remember that small and medium players display ‘a fire in the belly’ attitude which translates to greater customer orientation.  The same may not available in equal quantities with the behemoths of the industry with extremely impressive financials.
  • Assess a supplier on quality as well as price. Making a selection on price alone or driving the price down below market rates could impact quality in a negative manner and push the whole deal from potential success to certain doom.. Never forget that when we pay peanuts, we will get monkeys on the payroll.
  • Check references, and carefully evaluate the supplier’s historical performance. . While doing so, look at how many customers chose to renew a contract with a supplier, and how many chose an alternative supplier once the contract ended.
  • Ascertain the supplier’s focus on upgrading and improving the service or product.  What enhancements have been introduced over the past few years?  Did existing clients have to pay extra for these enhancements?
  • Where relevant, verify that the supplier has the ability to provide you with ongoing support.
  • Never close with the first supplier who managed to impress. While every situation does not warrant a formal bid process, know enough about what other suppliers are offering to facilitate an informed and effective choice driven by your requirements and linked to their importance to you.

Finally, in selecting the best supplier for your needs, consider each supplier’s source of differentiation.  Does the supplier claim to be the biggest, or the least expensive?  Is the supplier offering a unique product or service not attainable elsewhere?  How does the supplier’s value proposition and source of differentiation match with your priorities? What other factors are of importance to your company in selecting suppliers?  The best supplier for you is the one that most closely aligns with your needs, and is most committed to satisfying those needs over an extended period of time.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.