3 Elements of Screening Suppliers by Big Buyers Leave a comment

For screening suppliers, big buyers are different from small and medium customers. Big buyers think more and need to balance more elements. All in all, it is more demanding in all aspects and more picky about suppliers.

A single beauty with a good job and superior background must have many pursuers. So, she has more choices than the average girls. The same is true for the foreign trade industry. For suppliers, the allure of big buyers is often no less than a beauty. Cooperating with big buyers is also both for the inside and the outside.

The outside is an invisible advertisement, which can improve the image of the company, and indirectly proves its ability. Especially when developing other small and medium-sized customers, they will be confident in you.

The inside is a real benefit. Most small and medium-sized customers are not comparable to the main suppliers of big buyers. For small customers, you may spend months to follow up, and you will get a $20,000 order. Big buyers are different. The follow-up and development for them are more difficult, and the probability of success is not high. You need to pay more effort and patience. But once you succeed, a single order will generate millions of dollars in revenue. Moreover, the advertising effect of big buyers tends to push other hesitant customers to place orders. This is also an invaluable gain.

As we all know, quantity does not represent quality. There is also a huge difference between different customers. For example, for fruit stores, which is more important for individual customers or customers who buy hundreds of boxes of fruit every month? The answer is clear. Everyone wants to maintain big customers while still capturing other opportunities.

So, what are the criteria for large buyers to screen suppliers? Here, based on my buyer experience in the top 500 companies, I briefly summarize three elements that big buyers choose suppliers.

Elements 1: Safety

Safety should be put in the first place. Even if the expected profit is considerable, the big buyer will choose to reduce the income expectation in exchange for the safety of the project.

For example, there is a new supplier that is good in all aspects. His product can fully meet the existing standards, even better. And he can also reduce the price by another 15%. Will the big buyer immediately transfer the order to him?

Even though the big buyer has the intention, he will not immediately transfer the order. But, from the perspective of risk assessment, if he can’t tell the risk of an immediate transfer, he will take a small step forward to try. The big buyer may start cooperation through test orders to test the supplier’s coordination and product quality. This may take a long time to confirm until it is determined that this supplier can replace the original one. At that time, the big buyer will gradually put him into the rank of main suppliers.

If new suppliers enter the mainstream supply chain of large buyers, will regular suppliers be replaced quickly? This is the balancing strategy mentioned earlier. If there are main suppliers, there will also be alternative suppliers, which is for safety reasons. The better one will have more orders. But that doesn’t mean the worse one will be out directly.

Then, it comes to the payment method. Big buyers are also very strict in this regard. Salespeople usually require a 30% deposit and the balance is paid off by a copy of B/L when he develops small and medium-sized customers. Even if many customers cannot accept it, salespeople can change the payment method to LC at sight.then they can often solve the problem. However, for big buyers, these two ways will not work. They may ask for a 60-day, 90-day account period. Payment at sight is rarely accepted, and a deposit is even less likely.

Why would the buyer do that? Are these big companies short of money? Of course not. The relationship between supply and demand may determine this aspect. Too many people want to get orders from big customers. So they naturally make concessions on payment methods. On the other hand, it’s a safety issue. There is no deposit and long-term payment, which is often an invisible deterrent to the supplier. It can force suppliers to perform the contract. It will be difficult for suppliers to cheat on labor and materials and delay the delivery date. The initiative is in the hands of the buyer, and the supplier’s default cost is high. Thus, the safety of buyers is higher.

Elements 2: Benefit

Benefits are the premise of all cooperation. As long as it is an enterprise, it all cares about the benefits and wants to make more profits. Buyers naturally want to compress purchase costs. The lower the purchase price, the higher the profit of the big buyer, and the more the room for all kinds of operations.

Think about it, will you consider the price when you buy things ourselves? Of course. Even if you’re rich, you’ll mind the price. If it is 3 yuan for cola in the convenience store on the left of the company, but 6 yuan for it in the store on the right, which would you choose?

If there is no other reason, of course, you are going to buy the one costing 3 yuan.

Of course, there are other factors to consider. If the 6-yuan store is within 500 meters but the 3-yuan store is outside 1,500 meters, you may consider the issue of distance. Or maybe in the 6-yuan shop, there is a beautiful clerk, and you want to meet her.

This explains a problem: if you want the buyer to lose his interests, there must be a reason for him to accept. Without advantages, features, or added-value, how can you let customers give up some interests for you under the same conditions? Therefore, his choice is often realistic because it is related to the interests of the company and his future. Once an inappropriate supplier enters the company’s procurement system, it may bring a series of negative effects.

Because it involves the company’s strategic planning and global sourcing strategy, it is unlikely that it will be affected by emotion.

Other factors are, of course, important. But the interest is a factor that big buyers have never been able to lower expectations.

Elements 3: Happiness

There is no need to explain this point because you can experience a lot in life. For example, if you go to the mall to buy clothes but meet a counter salesperson who ignores you and satirizes you, will you still buy from her?

I believe that most people will not. This example may be a little extreme. But it also shows that your emotions tend to influence your spending preferences. So, if you are discontent with one supplier and you have other options, you may choose another supplier.

But in many cases, this is often the case through comparison. If your product service is average, but your peers are worse, buyers may choose to work with you. However, if your products and services are ordinary, but your peers are good, you may be out.

Here I want to say a fact. That is, you may not receive an order because you are capable, but your peer provides a worse service in the inquiry. Thus, the buyer chooses you.

So Happiness is an essential factor. If you have a bad temper, please control yourself when dealing with the buyer.

 

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