Whether you run a retail store, have a wholesale venture, operate an events-based business, or otherwise have to obtain goods from suppliers near and far, it’s vital to streamline operations for yourself and your team.
You don’t want everybody to constantly have to spend time sourcing new vendors or setting up new systems for paying or creating invoices.
It helps to develop preferred supplier lists for your venture, so team members know exactly who to approach and how to do so. Read on for the lowdown on preferred supplier lists to help you operate more effectively in 2022 and beyond.
What Is a Preferred Supplier List?
A preferred supplier list is a document you create that puts together the names and contact details of vendors your business has identified and chosen to work with regularly for numerous goods. These lists are given to purchasing officers and other employees who handle procurement and purchasing.
It assists them in selecting suppliers because they can go straight to a list of companies that have already been looked into, reviewed, and chosen as offering suitable items at the right prices with the most favorable terms and conditions. Workers can then pick a vendor from the list to approach for the goods required.
Note, though, that the staff within a business responsible for procurement and P2P functions must manage and monitor vendor performance over time to ensure that the firms on the list continue to make the cut. It is typically the same employees who add vendors to the list in the first place after investigating options and getting quotes, and finding out other details.
Benefits of The Lists
There are many benefits to setting up preferred supplier lists. One of the big pluses is the time savings created. Different employees across the organization who need to purchase products or parts can turn to the list and choose from just a couple of names or so rather than having to start from scratch every time to sort through all the vendors on the market. This means increased efficiency for your firm in turn.
Money can be saved when you have preferred supplier lists, too. Since you focus on using the same list of companies time after time, you’re more likely to become one of their better customers. As a result, you should be able to negotiate discounted prices and better payment terms. Similarly, since your business will become important to these suppliers and relationships will be built due to more frequent communications, you should find that you receive an improved quality of service from the firms. They should be more motivated and able not just to meet but exceed your expectations.
Also, if problems arise with orders or goods, it’s generally easier to sort issues out because your team is dealing with the same people repeatedly and develop a good working relationship and more trust than would build up otherwise. Furthermore, you should find that suppliers are loyal to you and prioritize your business due to the amount you give them. They will want to keep consistency high so that you stay satisfied, which means you shouldn’t have to switch vendors too often.
Tips for Creating Effective Supplier Lists
If you want to put together some preferred supplier lists, get clear on the types of products or parts that need to be purchased most often for your organization. This will give you an idea of the types of suppliers to research and focus on. Wherever you spend the most money is the place where it’s vital to assess the buying landscape closely.
Think about how many preferred suppliers you may need for each product category or type and the essential requirements you have for suppliers to get selected. Price is undoubtedly a top consideration, but things like company longevity, delivery timeframes, range, and customer service should be, too.
Once you have some suppliers to approach, get in touch with them and let them know you’re putting together a preferred supplier program and think their business could be a good fit for it. Explain the value of them joining your list and find out what pricing and terms they can offer you if chosen. Outline your expectations for this type of partnership and enable potential suppliers to pitch you their terms.
Keep tracking supplier performance over the months and seek feedback from the buyers in your firm about how effectively the program is progressing from their point of view. If it’s taking a while for spending to be directed towards the vendors on your list and for employees to get their heads wrapped around the list, you may need to set up some training for your team. Alternatively, hand out set procedures or guidelines for workers to follow each time they need to source products.
Creating preferred supplier lists may sound like an annoying extra job to put on your to-do list that isn’t very important, but that’s not the reality. The sooner you get this area streamlined, the sooner you and your team will start reaping the benefits and the more your business can grow.