A supply chain is the system of supplying a product to a customer and it’s a process that entrepreneurs running a product business must get right.
If you end up working with unreliable suppliers or you pay too much for your supplies, you could end up losing customers or reducing your profits.
Before selecting a supplier, be clear about what you want.
Think about exactly what you want the supplier to provide, the timescales and frequency you expect supplies to be delivered, and how much you are willing to spend.
There are thousands of suppliers available, but it’s easy to pick the wrong one for your business.
To find the right supplier, use trusted sources such as:
- asking fellow business owners for recommendations
- reading trade publications
- attending trade exhibitions and setting up meetings
- checking approved supplier lists from business groups and trade associations
- searching the government's UK supplier database.
Draw up a shortlist of suppliers and approach them with your detailed brief.
Compare their responses to decide which to speak to about negotiating a contract.
You might also want to carry out credit checks and ask for testimonials from their existing clients.
When finalising a contract, be clear about the factors that are important to you.
You can read our guide on negotiation tactics to help you with this process.
Once a deal is agreed, draw up a service level agreement which covers areas such as the responsibilities of both parties, the service the supplier must deliver, metrics for how service levels will be measured, and payment terms.
Be sure to maintain a good relationship with your supplier by communicating regularly.
Keep suppliers updated on changes, such as your plans to launch new products.
Be efficient with your orders, stock management, and payments.
Failing to pay a supplier on time can lead to disputes and delays, which could impact getting products to your customers.
Further reading
Read our guide to choosing the right supplier.
Download the guide
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Chapter nine: Marketing your business
Find out more about how to attract customers to your new business.
Next chapterBritish Business Bank plc is a development bank wholly owned by HM Government. British Business Bank plc and its subsidiaries are not banking institutions and do not operate as such. They are not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). A complete legal structure chart for the group can be found at british-business-bank.co.uk.
Whilst we make reasonable efforts to keep the information in this guide up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.
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