Choosing suppliers for your business

Criteria for selecting a supplier


Suppliers play a critical role in helping companies succeed. In order to find the right ones, businesses need to consider a number of critical factors, including:

  • price
  • value for money
  • quality
  • reliability
  • responsiveness
  • flexibility

Shared culture and location can also play a key role in a successful partnership. Effective purchasing should focus on what your business needs and what you want to achieve.

Value for money

If you are a start-up, a key consideration in choosing a supplier may be affordability. However, cheap suppliers don't always represent the best value for money. If you want reliability and quality from your suppliers, you'll have to decide how much you're willing to pay for your supplies. It is important to strike a balance between cost, reliability, quality and service.

Quality and reliability

The quality of your supplies needs to be consistent - your customers associate poor quality with you, not your suppliers. Equally, if your supplier lets you down with a late delivery or faulty supplies, you may let your customer down.

Speed and flexibility

Being able to place frequent, small orders lets you avoid tying up too much working capital in stock. Flexible suppliers help you respond quickly to changing customer demands and sudden emergencies. If you want to cut down the time it takes you to serve your customers, suppliers that offer you a quick delivery service will rate higher than those that compete on other factors - for example, on price alone.

Strong service and clear communication

Communication is important in ensuring a good working relationship with your supplier. From the initial briefing, through continual feedback and routine meetings, your supplier should communicate openly and regularly. You need your suppliers to deliver on time, or to be honest and give you plenty of warning if they can't.

Financial stability

It's always worth making sure your supplier has sufficiently strong cashflow to deliver what you want, when you need it. A credit check will help reassure you that they won't go out of business when you need them most. You can run a company search via GOV.UK.

How many suppliers do you need?

It's well worth examining how many suppliers you really need. Buying from a carefully targeted group could have a number of benefits:

  • it will be easier to control your suppliers
  • your business will become more important to them
  • you may be able to make deals that give you an extra competitive advantage

However, it's important to have a choice of supply sources and carefully weigh up the advantages and disadvantages of single or multiple supplier strategy.