Suppliers are key stakeholders in your business, and finding reliable suppliers is important for business success. Not having good suppliers can be a weakness, and disrupt production and/or the delivery of services.

Supplier management is an on-going process within a business. It seeks to reduce risk in the purchasing process, and maximise value from the supply chain.

Businesses expect suppliers to provide:

• quality products and services
• relevant and up-to-date solutions
• on-time delivery.

Companies should also seek suppliers who are financially sound and have a good reputation.

Selecting a supplier should be done with a great deal of care. The degree to which a supplier is screened, however, will depend on what is being purchased, how much is being purchased, importance of the item to the business and/or the investment being made.

Due diligence on the supplier should be conducted including:

• inspection of the factory or premises
• sampling of the product/service
• references from relevant customers (at least 3)
• understanding of ownership of the business
• adherence to quality management systems/assurance , standards or industry certifications
• general reputation
• on-time delivery record
• warranties/guarantees
• financial standing.

If the supplier is located offshore, consultants, industry bodies or Austrade (www.austrade.gov.au) can help with the due diligence process. If goods are coming from overseas, it is extremely important that the due diligence process be carried out thoroughly, and that mechanisms be put in place to inspect the quality of goods before they leave the country. There are a number of firms that can help in this process.

Once a supplier has been engaged, performance measures should be put in place. These measures can include:

• percentage of returns/defects
• on-time delivery
• quality of the product/service, including packaging
• responsive to service requests.

Any deficiencies in performance should be communicated right away, and depending on the agreement with the supplier, compensation or a refund should be sought.

As an important part of the business, the supplier relationship must be nurtured. A collaborative relationship is often best where a business can discuss with its supplier its growth plans, challenges and issues and invite the supplier to provide solutions.

Remember that you are just as important to the supplier, so working closely together can provide win-win outcomes and a collaborative partnership. This collaboration can lead to innovative solutions and growth.