Supplies and Suppliers

Purchasing office supplies is often regarded as unimportant. As a result, many start-up businesses end up paying far too much. Make the initial choices yourself. Then give one person responsibility for reordering, try not overstock. Almost all suppliers will offer you next-day delivery.

 

Look at the alternative suppliers

 

Before buying any equipment, consider the various possibilities. Different choices will alter the amount of capital you need to put into your business and affect your costs.

 

There are several options. You could buy the equipment outright, but you then have to ensure that you can afford to tie up your cash in capital equipment?

 

You could purchase the equipment second-hand. You then need to make sure it is from a reliable source and works well.

 

You may think about hire purchase of the equipment. This is a way of buying without having to pay for your purchase in one go.

 

Specify what you want

 

Identify the most important features of the goods or services being supplied.
Decide what you want your purchase to do, and how well it should do it. Agree details with the potential supplier, and set them out in a specification this might include, size, quality and appearance, technical features. You should also find out the delivery schedule.

 

Be reasonable, and don’t over specify. Unnecessary specifications are counterproductive, costs will be increased and suppliers will get irritated.

 

Make sure you agree everything in writing. The specification and the terms you agree will form the basis of the purchase contract.

·                     Relationships often break down because of misunderstandings. Having a written contract avoids this. Verbal agreements are also binding in law, but are difficult to prove.·                     Unless you propose your own terms, you may be agreeing to the supplier’s terms.·                     All the specific terms agreed should be included in the written contract.

The supplier will soon learn what needs to be done to achieve the standards you require.

 

Supplier

 

Try to avoid over dependency on one supplier. As the supplier may go bust and alternative suppliers provide competition.

 

Give most of your orders to just a few suppliers, and if appropriate, ask for bulk or cumulative discounts. Treat suppliers well and they will treat you well by:

·                     Keep them up to date with your needs.·                     Build a relationship of trust.·                     Ask for their views and ideas.

·                     Consider establishing long-term partnerships with key suppliers. Co-operate to improve the goods and services supplied and relevant procedures and systems.

 

Agree on payment terms, payments in advance should generally be avoided, especially if you are unsure about the supplier’s creditworthiness. You can always ask for a discount for early payment.

 

Supplier selection

 

Suppliers should be easy to find, through existing suppliers or competitors’ suppliers, trade journals, trade associations and Chambers of Commerce, and maybe even suggestions from friends and employees.

 

Make up a shortlist and write to each supplier, explaining your exact requirements. Ask suppliers to send you product details, price lists and other relevant information. You can often obtain better terms by letting suppliers know that they are competing for your order.

 

Pick out suppliers you believe can offer the quality of product and service you need. Compare them in terms of:

·                     Product suitability and reliability.·                     Reputation, based on references.·                     Quality and flexibility of service.·                     Location and ease of communication.·                     Speed and frequency of delivery.

·                     Price range and order size.

 

For long-term supply contracts, make the effort to visit those suppliers that seem to meet your quality standards. To assess how they are likely to perform, ask yourself:

·                     Are they professional, or sloppy?·                     Do they have too much work, or not enough?·                     How eager are they for your business?·                     Do they have the necessary equipment and space to cope with your order?

·                     Do they appear to be financially stable?

 

Get quotes, including details like discounts and payment terms, to use in negotiations. Ask how often prices will rise, what influences will cause them to rise, and how you will be notified.

 

Once you have narrowed the choice down to two or three suppliers, negotiate prices, discounts and levels of service. For a healthy long-term relationship, do not negotiate too hard a price at the expense of quality.

By Martin Huckle