Sourcing 101: 9 Key Questions to Ask Suppliers

by Stef Calimlim (Content Editor)

Selecting the right supplier, whether raw materials or finished products, can be a time-consuming, labor-intensive, and costly procurement task. It is inevitable and necessary that there are a number of things to consider before embarking on a purchase, one of which is your ability to ask the right questions of potential suppliers and suppliers.

Asking the right questions, especially during this unprecedented global health and economic downturn, can not only help companies weather the downturn but also help streamline their communications efforts and reduce the risk of disruptions. It simplifies the selection process and gives businesses a comprehensive understanding of each vendor's capabilities and what they can offer. While many vendors already provide company information and FAQs on their pages or third-party websites, it is still best practice to communicate with them directly and confirm any information before entering into any agreement or partnership. Selecting the right supplier, whether raw materials or finished products, can be a time-consuming, labor-intensive, and costly procurement task. It is inevitable and necessary that there are a number of things to consider before embarking on a purchase, one of which is your ability to ask the right questions of potential suppliers and suppliers.

Here are the key questions you need to ask suppliers:

1. Do you have a quality management system (QMS) in place?

Often, manufacturers will directly provide information that they are certified (ISO, OHSAS, IATF, etc.) and that they comply with various international standards. Some companies have dedicated quality management staff who can provide details of their policies, processes and procedures. Knowing that the supplier uses a quality management system and knowing the specific standards they follow will ensure that the products you are sourcing are of high quality and that you are dealing with a trusted supplier.

2. What changes in your staff management, product delivery and infrastructure did you make during the pandemic?

Doing business in the time of the COVID-19 pandemic is not just risky but deeply uncertain. Those who decide to continue doing business should know what adjustments their prospective suppliers have made throughout the pandemic and whether they have a business continuity or disaster contingency plan in place to help them adjust their sourcing strategies as well. Knowing the changes such as the supplier’s ability to operate effectively and efficiently on a scaled down basis, upgrades or downgrades on the IT system or equipment, and delivery and inventory strategies helps buyers determine a supplier’s capability to handle typical functions on unprecedented situations.

3. What is your scope of service?

Some suppliers offer one-stop services, other are capable of handling OEM and ODM requests, and there are also those that provide their own brands. There are also suppliers that handle R&D and QC in-house, while some sub-contract other services. Depending on a buyer’s needs, knowing the extent of services a supplier provides will help buyers make an economic decision.

4. What communication systems do you use?

In business, communication is everything. It is not only important to get a quick response from a supplier but more importantly, it’s crucial to know if they have flexible communication systems in place? Do they have a dedicated staff for answering your queries or are they outsourcing their customer service? Can they be contacted easily through social media apps, do they use chatbots or do they just strictly communicate via calls and e-mails? Should problems arise, it is important to be able to contact suppliers whatever their mode of communication is.

5. Do you have a minimum order? Is it negotiable?

Depending on the products they offer, most suppliers already provide details about their minimum order requirements in their websites, but it helps to know whether these are still up for negotiations or not. Knowing the minimum order quantity helps buyers manage their flow of income and ensures they can order enough products in the future.

6. What are your payment terms and are they negotiable? Do you offer volume discounts?

Many suppliers offer credit terms between 15 and 90 days, depending on the industry or product. Some suppliers are willing to extend payment dues, while others provide discounts or special deals when you pay in advance, 100 percent upfront or reach a certain amount or volume of orders. Depending on the financial capability, the payment term is something that a buyer should definitely ask a prospective supplier.

7. What are my total costs?

In connection with knowing the payment terms, it is also important to clarify with a supplier the total costs that will be incurred. While suppliers may provide a quotation, it is important to get a complete list of other fees and charges that the transaction will incur.

8. What happens if products arrive damaged, late or don’t arrive at all?

In the event that the orders arrive beyond the time agreed upon or worse, they don’t arrive at all or are defective upon receipt, does the supplier offer any form of insurance, refund, or compensation for damage or loss? Do they follow shipping, common carrier or other transport and commerce laws and regulations? How is the refund process, if there’s any? Knowing these in advance will save buyers the time, cost and hassle of filing complaints and claiming for damage or loss in the event that an unfortunate incident happens, and avoid shady or non-compliant suppliers.

9. Do you employ sustainable production methods?

Although often overlooked and ignored, sustainability in an important economic development principle that all organizations and businesses must adhere to. Are suppliers employing ethical business practices? Are their production methods, procurement procedures and waste management systems sustainable and environmentally friendly? A supplier’s environmental impact is a reflection of how they manage their overall business.