Identifying the right supplier may be difficult, and a sizable proportion of procurement teams consider this the most challenging component of their job. Knowing how to find and choose a supplier ensures that the products and services are supplied on time, at a suitable price, and according to your standards if you work with a reliable and trustworthy provider. Your client’s happiness and your company’s image might be damaged if you make a mistake in selecting a supplier.
The capability of your business to supply high-quality products and services at competitive prices may be hampered if your supplier cannot be relied upon or does not produce high-quality items.
A well-designed procurement process will guarantee that the business firm connects with the appropriate supplier. According to a recent study, the procurement outsourcing industry is predicted to reach USD $5.03 billion by 2025. This is a clear indication that the procuring process of identifying suitable suppliers has led to economic growth. Get a piece of that growth by understanding how to choose suppliers.
No. Really…How Do You Choose a Supplier?
This article will walk you through the eight most important actions to take to identify the best potential suppliers for your goods, components, or raw materials.
1. Price
Price is one of the critical factors to consider from a supplier. However, you shouldn’t merely pick a supplier based on their price alone, especially if the purchase is non-commodity items. When it comes to general costs, low-quality products and services may not be the best choice in all cases. Be satisfied that your supplier needs to earn a sufficient profit at the specified price for the company to remain in business.
2. Conduct Market Research
In the digital world, it’s becoming easier to conduct due diligence online and discover information via searches and by reviewing the websites or blogs of the potential suppliers of your products or services.
While not all suppliers have company websites, most have developed a digital presence via networks, virtual stores, and establishing a presence in supplier platforms. You may have to do some exploration in the markets to get the important information you need to help decide about organizations you are thinking about engaging, but this discovery process is vital when choosing a supplier.
3. Ask for Samples/Trials
These are free. However, you may be liable for delivery costs. This will assist you in deciding on the appropriate service provider or manufacturer for your good quality. Your intuition plays a significant role in finding quality items and in choosing a supplier.
However, hands-on analysis of a supplier’s service or product is necessary to ensure that the service or product will fulfill your needs. You may test your goods in the market after finding a dependable supplier to determine whether your clients/buyers are interested. It’s also good to ask for tangible evidence like images, video clips, or detailed information of the facility, products, or services offered.
4. Ascertain Supplier Authorization
When you hire a firm or company for your products or services, be sure the provider has a solid reputation, has been in business for a while, and has no documented problems. They may also include a manufacturing certification stamp from the location, which is an additional plus. For suppliers with unique products but newly in the market, it’s advisable to test their samples/products by observing their products for a while and getting reviews from their first clients; this will increase the chances of getting quality products. Also, for the manufacturers of products, one can agree with the supplier to provide a warranty of their products that are new in the market.
5. Examine the reviews
The best way to make a final judgment on the list of suppliers you’ve engaged with is to get recommendations from previous customers. If you use one of the leading marketplaces, such as Amazon, you can check the reviews directly from their sales page. Still, if you find the supplier elsewhere, such as the internet, you’ll have to communicate with other people who’ve used them or do some due diligence on your own.
6. Understand supplier’s scaling
The supplier’s ability to accommodate small and large orders is an essential factor to keep in mind. If you’re seeking smaller numbers of samples, you’ll likely discover providers that specialize in that amount. If you demand massive shipments of the goods over time, you may soon exceed your initial supplier choices. To ensure that you’re working with a supplier that can easily expand to meet your changing requirements, you need to know the product’s growth trend and have some sense of the supplier’s ability to fulfill your expected demand.
7. Recognize The Distribution Networks In Your Business
Products may go from the producer to the merchant in a variety of ways. All suppliers aren’t aimed at the same customer base. To identify the best supplier for your business, you need to know your company’s distribution networks and supply chain in detail. Suppliers come in various forms, including service providers, subcontractors, manufacturers/producers, distributors, and importers.
8. Get To Know The People That Provide Your Goods And Services
Until now, while it has been commonplace to visit your suppliers and tour their factory (even if you can’t afford it initially), the circumstances of today’s global commerce footprint coupled with the impact of the pandemic have made that difficult.
The good news is, technology has made it possible to reduce some of the logistical challenges and costs while preserving the significant due diligence needed. The motivation, however, is still the same – gaining better knowledge may provide you with a wealth of new insights. It also cements your connection with the supplier, and you are no longer a nameless client in another nation.
What Will You Gain From Increased Tier-1 & Tier-2 Diversity Spend Visibility
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There’s no doubt that building a successful supplier diversity program benefits an organization in many ways, such as driving innovation, improving the bottom line and enhancing a positive brand image.
A supplier diversity program has been considered one of the best business practices in maintaining high moral and ethical standards. To maximize the effectiveness of the program,. procurement professionals are expected to not only build but also grow aggressively and expand a supplier diversity program to maximize the diverse spend.
One of the most powerful ways to scale your supplier diversity program is to analyze, track and manage multi-tier diverse spend and turn it into insights. Yet, it’s easier said than done. According to the Deloitte annual Global Chief Procurement Offer (CPO) survey, supply chain transparency is poor, with 65% of procurement leaders having limited or no visibility beyond their tier-one suppliers.
This article will dive deeper into this topic and why you should take it seriously.
What is Multi-Tier Diverse Spend Reporting?
Diverse Spend, also known as diverse supplier spend, is the dollar amount spent solely with diverse-owned suppliers. It can be measured by a dollar amount or percentage of total procurement spend.
Multi-tier goes beyond your first tier of suppliers and allows you to gain the complete picture of diverse spend in the supplier network within your supply chain. In other words, it collects data on both direct and indirect spend at Tier 2, Tier 3 and beyond.
Tier-1 Tier-2 Supplier Diversity Spend
When it comes to diverse spend, there are typically two main supplier categories: tier-1 and tier-2. Both of them are critical for supply chain success. Tier-1 suppliers, also known as prime suppliers, are those businesses that directly sell products and services to a buyer, while tier-2 provide tier-1 suppliers with the products and/or services that are sold to that buyer.
The Importance of Increased Tier-1 Tier-2 Diversity Spend Reporting Visibility
Implementing multi-tier diverse spend into your procurement practices is one of the best practices to recognize and advocate for underrepresented minority groups as well as diversify the supplier’s workforce. The following points are your competitive advantages if you have transparent multi-tier diverse spend data.
Scale Your Supplier Diversity Program
If you’re looking for ways to increase your diverse spend towards meeting the organization’s procurement goals, tracking beyond your tier 1 diverse spend is the ultimate solution. With full visibility and control, procurement teams not only save a lot of time and money to expand their program but also be able to look at their impacts in a broader view.
It’s fairly common that many small and diverse businesses in the supply chain may not be working directly with major organizations. Instead, they are likely to work with your Tier-1 suppliers. With full visibility and control, you can look at your whole supplier network beyond Tier-1, track and measure how much you indirectly spend and contribute to the community.
More Opportunities For Small and Diverse Businesses
“Without big data analytics, companies are blind and deaf, wandering out onto the web like deer on a freeway.” – Geoffrey Moore.
When having a clear view of your all-tier diverse spend, you take full control of how your tier-1 suppliers are doing and their spend activities. From there, you make a more strategic decision to partner with those Tier-1 suppliers that have subcontractors with diverse-owned businesses. In short, you indirectly support growth and job creation for the community.
Branding
As you expand your diverse spend reporting to Tier-2 and beyond, your program can demonstrate a more significant impact on the community. A strong supplier diversity program will demonstrate your commitment to making the world a better place, more so than just focusing on making money. It is a good branding practice as well as a key selling point when hiring.
Streamline Your Tier-1 Tier-2 Diversity Spend Reporting
The challenges of measuring and tracking multi-tier suppliers are not easy at all. As you don’t directly purchase products or services from Tier-2 suppliers, there is some complexity to tracking this data. The only solution is to engage and coordinate with Tier-1 suppliers to collect and organize this data for every project.
As an organization may have thousands of Tier-1 suppliers and hundreds of ongoing projects, automating the process is a must. SupplierGATEWAY provides one-stop-shop solutions to streamline your multi-tier diverse spend management, then create a simple, intuitive and straightforward report demonstrating your impact.
About SupplierGATEWAY Economic Impact Reporting
Using our on-demand Economic Impact Reporting capability in the SupplierGATEWAY, you can comprehend a big picture of your diverse suppliers’ data, including what business category creates the most impact and what geographic regions are being impacted the most and how many jobs your inclusive behavior is supporting.
Our system leverages the BEA RIMS II model to analyze and summarize the economic impact of your spend in a comprehensive and user-friendly dashboard. To learn more, please visit our site.
Enhanced Digital Certification— A New Digital Era for Engaging Diverse Businesses
In today’s complex sourcing landscape, a diverse and inclusive supplier base is now widely accepted as a procurement best practice; from creating bottom-line savings and creating future demand, to projecting a better more socially oriented image. Hence, supplier diversity initiatives are highly recommended if you’re looking for a sustainable way to promote innovation and economic impact while creating competitive advantages that can differentiate your organization.
A study released by the Hackett Group found companies with diverse supplier lists drive an additional $3.6 million to a company’s bottom line for every $1 million spent on operations costs in procurement. This is literally “doing well by doing good.”
It would seem that establishing and implementing a supplier diversity program shouldn’t be difficult, but it is. One common refrain by buyers is that it can be difficult to find diverse suppliers, especially in niche industry spaces.
Current Challenges
To find one of the reasons behind this challenge, let’s look at the supplier’s side. To be a qualified diverse supplier, they must:
Be well-qualified, including creating a business, surviving, being innovative, and being as good or better than their competition for cost, quality, and service.
Spend time and money to go through a lengthy process to be certified as diverse-owned. It’s no surprise that many small business owners view this as an added “tax” on their business.
Hence, many suppliers decide to be self-identified as diverse instead of getting certified, which unfortunately does not meet many buyer’s inclusion program requirements, especially in big corporations.
As a result, it negatively affects procurement professionals’ opportunity to expand their diversity program, and diverse suppliers get left out. This is the paradox we sought to break.
With a mission of Making it Easier to Do Business™, SupplierGATEWAY is thrilled to launch Enhanced Digital Certification (EDC), a new innovative and robust digital certification program – a powerful tool to address all the challenges we mentioned.
What is Enhanced Digital Certification?
Enhanced Digital Certification™ (EDC) is a new, innovative and powerful digital certification program designed to enable all types of diverse businesses to reduce the hassle of acquiring a valid certification of diverse ownership.
EDC is gaining widespread acceptance by some of the most prominent advocates of inclusive purchasing – all of whom also seek to create new economic impact at scale. By digitizing and streamlining the diversity certification process, we have made it easier, faster and much less costly for suppliers to achieve diversity certification.
Verify Your Suppliers Electronically 24/7 At No Cost
Everything you need to know about a business’s diverse ownership is in this digital certification. You can look up the business information by scanning the ECC QR code, entering the certification ID in your SupplierGATEWAY portal or accessing the SupplierGATEWAY EDC Validation API connected to your ERP and purchasing systems.
Unique QR Code can be used to validate certification status 24/7! EDC QR Codes can also be placed on websites, literature and emails.
Only One Click to Get All Information You Need
You can easily find potential and current suppliers’ diverse information by using their certification ID in your portal’s search tools or even simply scanning the QR Code in the certificate to receive all information you need.
Detailed business information after scanning QR Code
Using the “Verify Enhancement Digital Certification” box to verify suppliers’ certifications
While You Read This Blog, EDC is Already Configured In Your Portal And Ready-To-Use
If you’re a buyer and currently using SupplierGATEWAY’s software, everything is FREE – there are no hidden costs. We hand you this power to freely and quickly source qualified diverse suppliers. Once a new supplier registers in your portal, they have an option to start the application.
EDC Process
Sponsorship Opportunities – Maximize Sourcing Power and Make A Significant Economic Impact on The Community
To make a mark on accelerating inclusion and diversity, we offer unique opportunities to sponsor diverse suppliers’ costs to get certified in a targeted area or market, or for specific diverse business groups that you are trying to engage. By doing so, your business speeds up a certification path for eligible suppliers. You get the satisfaction of directly contributing to the economic impact of every business you sponsor.
Our program has already gained traction, and we’re thrilled that Amazon Business and LA Clippers already took the initiative to grow their supplier bases speedily.
This is an excellent opportunity to show your commitment to the community and align with the corporation supplier diversity goals while aggressively sourcing the mass number of small and diverse suppliers your corporation is seeking.
Some additional benefits include:
Create business opportunities for small and diverse businesses to grow and scale
A Path To Business Success – Grow Together, Win Together
By encouraging your current and potential suppliers to get the EDC, your business increases the volume of opportunities to multiple suppliers – from minority-owned, women-owned, veteran-owned, LGBT-owned, service-disabled veteran-owned, historically underutilized businesses.
In the past few years, the massive shifts underway in the business and social landscape towards inclusive procurement have proved that integrating supplier diversity into business operations is not just the right thing to do but also benefits everyone. EDC is here to help build your supplier diversity program successfully.
AB 962 – Impacting Total Healthcare With Supplier Diversity
Watch our AB 962 Webinar, updated for new 2022 reporting requirements:
With AB 962, hospitals are expected to increase engagement and partnerships with diverse businesses to leverage the rapid growth of the health sector to benefit marginalized communities in California.
What Is AB 962?
The California State Assembly passed Assembly Bill 962 (AB 962) in 2019. Authored by Assemblymember Autumn Burke (D-Inglewood), AB 962 supports and promotes diversity by requiring a licensed hospital with operating expenses of $50,000,000 or more, and a licensed hospital with operating expenses of $25,000,000 or more that is part of a hospital system, to annually submit a report on its certified minority, women, LGBT, and disabled veteran enterprises procurement efforts.
How AB 962 Immediately Impacts Hospitals
The original report was due on July 1, 2021 and then updated annually. Failure to file a report within 30 days after the deadline shall subject the licensed hospital to a civil penalty of $100 per day. The report requires collecting qualitative and quantitative data as evidence of inclusive procurement practices, and all the information must be readily accessible. Starting in 2022, AB 962 requirements changed and now include Tier 2 engagement reporting. This fundamentally changes how your hospital or health care system engages with tier 1 suppliers.
How SupplierGATEWAY Can Help You with AB 962 Supplier Diversity and Data Reporting Requirements
As a leading cloud-based supplier management platform, we are thrilled to give you a complete, easy-to-use, turnkey solution to support your organization’s supplier diversity and AB 962 data reporting requirements.
With the new Tier 2 requirements, your organization now has to put rubber to pavement, and our Supplier Diversity Platform helps your organization quickly and accurately organize, track and report all of your supplier diversity engagement metrics.
Our low-cost, instant-on solutions help accelerate your program efforts while making supplier management easier. We can also handle your supplier onboarding and offboarding, which makes your supplier management more robust/
Outreach Compliance Report Console
As part of your Supplier Diversity Platform, you’ll also have access to the AB962 Data Reporting and Outreach Compliance Report Console. This tool centralizes the key evaluation criteria of your program in one place. You can easily manage reports for an individual hospital or the entire system, all from one convenient location.
Save Time and Money
Organizing the data for your program can be an incredibly time-consuming task for an IT department that has more work than it does hands. Hiring an additional team member to handle your supplier diversity is an additional expense that might not be in the budget. Our Supplier Diversity Platform costs $12,500 per year, comes with built-in training, and support from a client success manager. Should you decide you want us to manage supplier enablement, credentialing, procurement, risk management and more, our Enterprise platform costs $37,500 for the year.
Remember: each day after 30 days that your report is late, your organization is fined $100 per day. This can easily accumulate to over $36,000 for the year.
Building solid relationships with local and diverse businesses and efficiently managing suppliers are the cornerstone of your company’s success in many ways. Having a responsive, flexible and reliable supplier management system is a critical component of any strategy aiming to positively impact both your company’s bottom-line and the community.
About SupplierGATEWAY:
SupplierGATEWAY is a leading cloud-based supplier management platform, which automates and simplifies vendor management. SupplierGATEWAY apps can be deployed individually or in any combination and easily integrated with existing AP/ERP infrastructure. The app capabilities encompass Supplier Registration and Enablement, P2P Sourcing and Procurement, Supplier Management, Financial Risk Monitoring, Supplier Compliance Management, Corporate Responsibility / Diversity, Vendor Credentialing.
SupplierGATEWAY has powered global supply management environments across multiple industries since 1997. We support billions of dollars in purchase transactions and hundreds of thousands of active suppliers in various industries, including Healthcare, Aerospace and Defense, Retail, Staffing, Manufacturing, Food and Beverage, Sports and Entertainment, and Health Sciences.
