Choosing suppliers for your business

Shortlisting potential suppliers


The way in which you procure, brief and interact with potential suppliers is vitally important. It sets the foundation for your future relationship and, to a certain extent, the success of your partnership.

To begin shortlisting candidates, draw up a list of your fundamental business requirements first. Include the products or services you need, the level of quality, stock requirements, delivery times and, finally, price. Check your list against the common criteria for selecting a supplier.

What to look for when shortlisting suppliers

Once you have determined your supplier criteria, research and identify suppliers that have a good track record of providing the products or services you need. If you don't know where to start, here are some tips on how to find the right supplier.

When creating your supplier shortlist, ask yourself the following questions:

  • Can these suppliers deliver what you want, when you want it?
  • Are they financially secure?
  • How long have they been established?
  • Do you know anyone who has used and can recommend them?
  • Are they on any approved supplier lists from trade associations, local or central government? Find a supplier to central government.

Try to narrow your supplier list down to no more than four or five candidates. It's a waste of time for you and the potential supplier if you approach them when there's little chance of them fulfilling your requirements.

How to approach a supplier?

Once you create a manageable shortlist, contact the candidates to see if they are interested in forming a business arrangement. Provide a clear brief, summarising what your requirements are and giving an idea of the level of business you hope to place.

Rather than specifying exactly what you want to purchase, you may want to ask suppliers for their suggestions. For example, you might explain to technology suppliers what you want your new IT system to be able to do and ask them to come up with recommendations within your budget.

Compare potential suppliers

Once suppliers respond, evaluate their offers in terms of what matters most to you. For example, the quality of their product or service may be most important, while their location may not matter.

Price is important, but it shouldn't be the only reason you choose a supplier. Lower prices may reflect poorer quality goods and services which, in the long run, may not be the most cost-effective option. Be confident that your supplier can make a sufficient margin at the price quoted for the business to be commercially viable.

Avoid common pitfalls when choosing a supplier

Wherever possible, meet potential suppliers face to face and see how their businesses operate. Check if they will be outsourcing any work to subcontractors, or rely on other suppliers for critical components or services. If so, you may want to assess these suppliers as well.

Finally, remember that the labour practices and environmental record of your suppliers may affect your business' reputation. Read more about ethical trading.