Top 10 Things to Think About When You’re Working with Multiple Suppliers
There’s a lot to think about when your business is working with multiple suppliers. Different price points, products, and shipping costs are just a few things that come into play when utilizing multiple suppliers. It’s a great idea for your business to consider all the factors of working with multiple suppliers. Here’s a list of the top 10 things to think about when you’re working with multiple suppliers.
1. Different Products. When you’re working with multiple vendors, they usually carry very different products. If you only have a few vendors, you might limit the number of products you can sell. Be aware of the different products the vendors you use carry. By utilizing all the products that will be profitable for your business, you can help your business grow and increase profits.
2. Different Prices. Different vendors can carry similar goods, but they are often at different prices. When you are using multiple vendors, you can choose the vendor with the best price for each product you are selling. Use different vendors for different products to greatly increase profitability.
3. Tracking Lead Time. Lead time is the time from when a customer places an order to when the customer actually receives the product. Different vendors will have different lead times. It is important to track lead time from different vendors, and find out which vendors are efficient about getting their products out, and which are not as efficient. This can be a great way to find out which vendors are best for your business.
4. Meeting Demands. If you have a product that generates a lot of sales, one vendor may not be able to provide you with enough of that product to meet demands. It may be a smart idea to have multiple suppliers providing you with that one product. That way you can be sure you will meet the demands from a high number of sales.
5. Profitability. Different vendors will have different prices and shipping costs. By tracking the profitability of your products and vendors, you can find out which vendors generate the most profit for your business. You can then use that information to focus on the most profitable vendors, and increase your businesses profitability.
6. Quality. If you are carrying products from multiple suppliers and find that one of your vendors is delivering low quality products, it does not have to be a huge problem. Since you use multiple suppliers, you can stop using the vendor that has low-quality products, and switch over to one of your other vendors or find a new vendor. If you only had one vendor, you would have complaints of low quality for all of your products. Instead they will just be for one of your multiple vendors’ products, and it will be a much easier fix and have less negative impact on your business.
7. Increasing Selection. If your local shoe store only carried one brand of shoe, would you consider shopping there? Probably not. It’s true to some extent for any company. Customers want choice. They want different brands with different looks, features, and prices. With multiple suppliers, you can provide that increase in selection. Multiple suppliers can provide similar products that give customers a choice in the product that they are looking to purchase. This is a great way to improve sales and profits.
8. Range of Products. If you’re only carrying a few types of products, you can limit the range of products your business sells. With multiple suppliers, you can provide a much greater range of products, and increase sales. If you’re only selling watches, it c0uld be extremely beneficial to use multiple suppliers to provide other accessories and jewelry as well. Increasing the range of products you carry can lead to a larger business and more sales.
9. Running Out of Stock. If you’re selling a hot item, your vendor can sometimes run out of stock of that item. If you have multiple suppliers, however, you can often use another vendor if needed. You can keep selling the item, and generating revenue. Also, if you run out of stock of an item, and have a very similar item from another vendor, it can take over the sales. Instead of going somewhere else to find the product you’re sold out of, customers often will buy the similar item that you carry from another vendor.
10. Shipping Costs. One of the most important thing you need to think about when working with multiple suppliers is shipping costs. Different suppliers can charge different shipping costs. This raises a problem when a customer places an order with multiple vendors and each vendor has a different shipping rate. What should you charge for shipping? One option is to charge a flat shipping rate, by averaging out the different shipping rates of your suppliers. You could end up with a greater or smaller shipping expense on each order, but it should average out over time. Another interesting option, and one that is gaining popularity, is to offer free shipping. Calculate the average of your shipping costs per product, then simply add that to the product’s price and offer free shipping. Either option would be a good solution to shipping costs, and a way to solve one of the main complications of using multiple suppliers.
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