Supplier due diligence
While hiring a new supplier can often be a great opportunity to increase sales and expand your market, the risks of this decision are often over looked and improperly managed. Hiring a new supplier that does not truly have your best interest at heart will surely be detrimental to your success as a business.
Worse yet, if you begin a business relationship with a supplier that is only concerned with self-interest your business may even be sucked in to their thirst for personal gain. Therefore, it is of utmost importance to attenuate due diligence to any potential relationship with a new supplier. It is crucial to examine the supplier’s background, evaluate your potential of gain for entering this relationship, and assess the supplier’s interest in the venture.
The first and most simple thing that needs to be considered when seeking a new supplier is background. Now with several employee feedback sites and online reviews, it is easier than ever to research the kind of work that this new supplier has done in the past. It’s just like hiring a new employee; if they have a bad track record of poor work performance, it is unlikely that they will be a positive asset to your endeavours now.
Foremost, although this should go without saying its importance mandates that it is at least briefly mentioned here -- conduct a criminal background check. It is quite simple to do, can be done very quickly, and provides your instant feedback as to whether this new supplier is someone that you want to do business with – if the person has any criminal history, the risks by far outweigh the potential for reward.
Likewise, it is essential analyze the possible risks and rewards of the situation at large. This may seem like it is common sense as well, but when you are seeking a contract with a new supplier out of necessity, it is often easy to neglect this crucial aspect.
Similarly, new businesses that are looking for a supplier to begin their enterprise are often duped by suppliers of mal intent. If the risk of hiring a new supplier is too great, it is important to remain patient and wait until you find a partner that works best for you.
The most important facet of due diligence in hiring a new supplier is determining where the supplier’s interests lie. If they are seeking a partnership simply because it is a source of income for them, they will not be willing to go the extra mile for you.
If a supplier is passionate about seeing your business succeed at its greatest potential and is willing to take the extra step to provide great service, it is important to reciprocate this attitude in negotiating a contract so as to fertilize a long, mutually beneficial relationship. It is natural to think about hiring a new supplier only from how you and your organization will benefit from the partnership, but it is important to remember the value that your counterpart gains as well from this relationship. Keeping your best interest, as well as the new supplier’s best interest in mind is the best strategy in creating new business partnerships.