Suppliers and contractors are both types of vendors to your organisation. A vendor is anyone who supplies goods or services to company, whether the items supplied go directly into the product or service the company sells, or are consumed by support services within the company.
A supplier will provide commercially available commodities that are sold to a varying range of customers or services that are required for their chain of business.
A contractor undertakes a contract to provide materials or labour to perform a service or do a job for you.
Suppliers and contractors are important to your business. They have the ability to significantly impact the way your business operates. Without reliable suppliers and/or contractors to your company, you will struggle to pull together relevant materials and services needed to help you delivering the product or service on time, every time. This is why it is so important to be selective when choosing the contractors or suppliers that you will be working with.
You’re looking for suppliers and contractors who will ensure that the material and resources you are after are delivered when you need them and be "fit for purpose".
You want to be able to have a good relationship with them. Having a good relationship with suppliers and contractors will ultimately save money for your company, due to less switching costs of suppliers and the ability to negotiate with them when needed.
Next, evaluate the critical suppliers against a fixed set of criteria. As an example, I have used the following criteria for over 20 years and it has stood up well over time:
Now that you are using your suppliers and contractors you need to continuously evaluate and their performance.
When you receive the product or service you need to check it against the order/contract and ask:
Don't have a “one-size-fits-all” controls for suppliers and contractors.
For the critical suppliers and contractors that have a significant risk to your business, put tighter controls in place. For others - not so much. Don't forget that you also need to make sure that your suppliers and contractors meet local food safety laws and regulations.