The complete guide to successful supplier sourcing

What is supplier sourcing?

Sourcing is the process of research, identify and compare potential suppliers in order to sign a supply contract under optimum conditions .

This involves locating potential suppliers and evaluating them to find the one or ones offering the best value for money.

Finding the right supplier enables your company to :

• Reduce costs . The aim of all sourcing is to find a supplier offering the best value for money. For this reason, sourcing must be a regular and ongoing process within a company. It is one of the strategies implemented by the company to ensure its competitiveness.

• Company development . The savings generated by an optimal choice of supplier can then be re-injected into other projects.

• Reliable products and services . The quality of the products supplied by your supplier determines your own brand image.

Why is sourcing essential to your business?

Supplier sourcing is a real challenge for any company. Choosing a supplier who is reliable, respects delivery deadlines and supplies quality products is a key factor in success. a guarantee of performance and success for a company .

It's an important link in the company's smooth operation, and helps to create a virtuous circle.

Marketing quality products is good for your brand image. And when you're delivered on time, you can honor your own commitment to on-time delivery.

On the other hand, effective sourcing allows you to reduce your costs and secure optimum margins.

Supplier sourcing offers real advantages to the company:

• Supplier independence . Good sourcing enables you to compete and work with the best suppliers, while limiting the potential consequences of a shutdown.

• An increase in margins by selecting suppliers offering the best value for money.

• Better anticipation of potential risks of rupture stocks.

Key stages in supplier sourcing

Here are the key steps in the supplier sourcing process:

Identify your specific needs

The very first step in sourcing is to define the company's needs . Once these have been identified, you can then draw up a list of selection criteria relevant to your organization.

For example, you might consider the following criteria:

• Product quality

• Customer service responsiveness

• Delivery times

• Geographical location

• The capacity to produce and respond to orders

• Compliance with environmental and/or social standards, etc.

Search for potential suppliers

Here are the most common ways to find suppliers:

• Researching on the Internet especially on social networks such as LinkedIn or marketplaces such as Alibaba

• Participate in trade shows and fairs

• Follow recommendations from third parties on social networks or friends and family

• Reviews and recommendations on social networks

• Trade associations (if you're active in a specific field and there's an association dedicated to it).

• Directories.

Evaluating and selecting suppliers

Now that you've compiled your short-list of potential suppliers, you need to evaluate and compare them. You can then categorize them according to the criteria you've been able to isolate.

In particular, you must evaluate each supplier on the basis of reputation, experience, performance, etc. . To do this, you can ask the supplier's other customers.

You can also apply for quality certifications such as ISO certification. In fact, these are key criteria for choosing between two potential suppliers. An ISO-certified supplier is a guarantee of the seriousness and professionalism of the supplier who holds it.

Negotiate conditions and draw up contracts

Once your list of suppliers has been drawn up, it's time for negotiations.

It is then a matter of enter into discussions with each supplier to see which one offers the best contractual terms (best value, services, etc.). Keep your list of criteria in mind when making your final choice.

The aim should be to establish win-win contracts in order to establish a trusting and lasting relationship . It's in the interests of both parties to work together.

Once negotiations are complete, the contract is finalized. Once signed, a supply agreement is established between the parties.

Our tips for good supplier sourcing

Here are our tips for good supplier sourcing:

Maintain solid relationships with your suppliers

Maintaining a real relationship of trust is essential for a smooth and lasting collaboration. You need to aim for stability in order to to avoid any risk of supply chain disruption, for example.

To do so, cultivate dialogue and communicate regularly . If your situation changes or your needs evolve, don't forget to adjust the terms of your agreement.

Common mistakes to avoid in supplier sourcing

Here are some common mistakes companies make when it comes to supplier sourcing. Avoid them to ensure successful sourcing:

Based on price alone

Favoring a supplier based on price alone is a strategy doomed to failure. Of course, you have to try to secure the highest possible margin. However, there are other criteria that must be taken into account cumulatively .

Imagine a supplier who offers competitive prices but fails to meet quality standards and delivery deadlines.

Effective sourcing must take into account a set of key criteria to find suppliers that are truly adapted to the company's needs.

Neglecting checks and follow-up

Supplier sourcing must be an ongoing strategy. The supplier's compliance with the terms of the contract must be regularly assessed. The contract itself must provide for measures to be taken in the event of non-compliance with commitments.

Only constant monitoring will enable you to react proactively and in good time, so that you don't suffer the damaging consequences.

Tools to facilitate supplier sourcing

Now that you know how to conduct your supplier sourcing process, here are the tools that will make your job easier:

Use professional networking platforms

There are platforms that can help you find suppliers easily. A whole list is just a click away on the Internet. Just make sure you choose a platform that aligns with the criteria you've defined in terms of business sectors, quality standards and so on.

At the top of the list of most popular platforms are Alibaba . It is indeed the reference solution for finding suppliers from all over the world . However, most of the suppliers you'll find on Alibaba are Chinese or from other Asian countries.

However, there are other platforms such as ThomasNet, DinoDirect and Global Sources .

Adopt supply chain management software

These are IT solutions designed to help companies to optimize their product inventory management process . Supply chain management software enables you to automate tracking and control of inventory movements .

In addition to your choice of supplier, using this type of software enables you to optimize your company's performance.

Using this type of software offers a number of advantages:

• Real-time visibility of available quantities, movements, levels and stock locations.

• Inventory optimization . Thanks to real-time monitoring of stock levels, you can take action to avoid stock-outs and overstocking.

• Alerts when replenishment is required

• Cost reduction .

In short, supplier sourcing is essential to a company's performance. Working with a reliable supplier is synonymous with optimizing the procurement process.