Choosing suppliers for your business

As a business you know that you want to outsource a specific task, but how do you go about choosing suppliers to ensure a good fit? This is something that I am asked quite frequently.

If the supplier relationship is for ongoing work, or for a complex project, then more than just price that will be important. The prospective suppliers may pitch to you or deliver sales documents that specify a lot more than just price.

Things to consider

So, the first thing you need to do is list out what is important for you as a business when choosing suppliers – some examples are below:

  • Size of supplier in terms of employees, turnover, profit
  • Knowledge of your sector. If they work for your competitors can they put suitable “walls” between teams for privacy.
  • Does their location matter?
  • How long have they been in business?
  • Will you be a small fish in a large pond, a large fish in a small pond or somewhere between? How will that affect the service that you receive?
  • Do they use the same software as yourself if documents have to be passed back and forth? Not just thinking Microsoft v Google here for office applications, but at one company the European office had Quark for Mac, Quark for PC, Indesign for Mac and Indesign for PC as head office had outsourced to various agencies and various file format were used. It was a nightmare in terms of keeping everything up to date. So the European office (which I headed up) put an internal SLA on the head office that only Indesign for PC would be used to save money, to get rid of the Mac and for ease of localisation.
  • What is the quality of the work they deliver? Maybe sample projects need to be done that can be marked, for example for localisation into other languages.
  • What is the customer service relationship like? What SLA would there be for issues to be addressed?
  • How quickly can they deliver?

Why not price?

You’ll notice that I didn’t list price in there at all. For me there are two ways of looking at price – the budget being spent is one; but the hidden costs of working with the wrong partner so having to spend time with more reviews that there should be; spending time chasing as delivery is late plus the lost opportunity cost of the late delivery and so on. Price isn’t as simple as pounds and pence and shouldn’t be a lead aspect when choosing suppliers.

Using a weighted matrix

Of course not everything will be as important as everything else. So you can weight the criteria that are important. My preferred way is to give everything a percentage – and the total adds up to 100%. So, you may deem quality to be 30%, customer service 15%, speed 10% …. and price 5%.

Each pitch or proposal is then marked out of 10 for each category. To get the final score the mark is multiplied by the percentage and the overall winner is found.

Below is an example:

A sample weighted matrix that uses other aspects rather than just price when choosing suppliers

As you can see, all the prospective suppliers have all scored 27 out of 50, but by looking at the weighted total there is a clear winner with Prospective Supplier 5. Of course, I tailored this so that they were all the same total out of 50, which wouldn’t happen in real life, but it demonstrates well the way that the criteria are not equal and therefore you are going to get the right supplier for you.

You can have as many criteria as you want – just make sure that the percentages add up to 100.

If you want to know more about how Cut Through Marketing can help you make the right choices, then drop us a line via the contact us form.

[Originally issued 3/12/20; edited 18/3/24]