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There are several things to consider when looking for suppliers for the materials, supplies, and resale items you will need for your business. Here are a few tips to keep in mind:
Decide which products and items you want to offer as "in stock" and which you will provide as "special order." As you gain experience with your product line, you may add items that sell well to your "in stock" category, or reclassify other items that are less in demand as "special order." Some consideration should be given to your supplier's lead-time for a particular item and how long it takes for the freight to arrive at your door. Plan to stock items that are quick movers or have a long lead-time, and special order items that you can receive in a few days.
When adding new offerings to your product line, order a few to see how your customers will receive them before placing a large order to add to your "in stock" inventory. The idea is to turn over your inventory an average of four times per year. You do not want cash tied up in slow-moving inventory items that you will have trouble selling.
Remember to display the items that you have in stock but also let your customers know that you may be able to accommodate special requests for unique items if time permits.
Unit price is not the only thing to look for when choosing a supplier. You will also need to consider the following:
When placing orders, it is good to get into the habit of faxing or emailing a written confirmation of the order to your supplier, and ask them to do the same. Confirm the order in writing, even if you've spoken to your supplier previously. Mark the order as "Confirming - Do Not Duplicate" to prevent the supplier from sending two shipments. This can alert you to any discrepancies in pricing, quantities, date of shipment, method of shipment, or other details, which could interfere with the commitments you've made to your customers.
Do not switch vendors at the drop of a hat. Loyalty can bring rewards. Your ability to negotiate special considerations in difficult times is much greater if you develop a strong relationship with the vendor. Vendors are happy to work with and support customers that are consistent and do not make unreasonable demands on them.
Keep good purchasing records. If you keep a manual system, save invoice copies and purchase orders. Both records will come in handy during disputes as well as for issuing future orders. If your system is computerized, keep prior year or history information available for reference. You will be able to detect price increase trends and make retail adjustments to compensate.
Take advantage of volume discounts. Find out if your suppliers offer price breaks at certain quantities, or if freight charges are free for orders over a particular dollar amount. When possible, try to plan your orders around these discounts.
Check for payment discounts. Some companies offer a 2% or more discount if you pay their invoices in 10 days instead of 30. This may not save many dollars for one small invoice, but if you can pay early, the savings at the end of a year can be significant.