How to choose and review your vendors

A vendor is not only a source of goods. A vendor's lateness becomes your lateness, and a vendor's defect becomes your customer's complaint. Yet many small businesses choose vendors by whoever quoted lowest or called last, and then review them only when something goes badly wrong. This guide gives a simple way to choose a vendor deliberately, check the choice with a small trial and review the relationship regularly. The examples are hypothetical.

Start with what you actually need

Before asking for quotes, write a short brief: what the item or service is, the quantity and how often, the quality you need, when you need it and how you will receive it. If you give each vendor a different description, you will get quotes you cannot compare. Decide which matters most for this purchase: price, speed, consistency or flexibility. You cannot have the best of all four, and knowing your priority makes the later choice easier.

Collect a few candidates

Ask other business owners you trust, check trade associations and use directories or marketplaces as a starting point rather than proof of reliability. Include your current vendor so you have a baseline. Two or three candidates is usually enough for a small purchase.

Compare the whole cost

Ask for quotes on the same specification, quantity and delivery terms, and write them side by side. Add what is easy to miss: transport, packing, taxes, the advance you must pay, the minimum order and how long the price is held. Then add the cost of problems: how often goods arrive late, defective or short. Suppose one vendor is cheaper per piece but wants a large advance and charges for transport, while another costs a little more but delivers free on credit. On a comparison sheet, the second may be the cheaper vendor in practice.

Check before you commit

Do not rely only on what a vendor tells you. Ask for samples and test them against your own need. Speak to one or two of their other customers and ask specific questions: Are deliveries on time? What happens when something is wrong? Has the quality stayed the same over time? If the product needs a licence, approval or certificate to be sold in India, ask to see it and confirm with the issuing body, because requirements vary by product and change over time. A vendor who is happy to put terms in writing and answer these questions is usually showing you how they will behave later.

Try a small order first

A trial order tells you more than a long meeting. Before you place it, decide what a pass looks like: delivered on the date promised, correct quantity, quality as agreed, paperwork correct. Watch how they communicate as well as what arrives. Keep your current source for the key items while you test. If the trial goes well, increase the volume in steps.

Agree the terms and write them down

Price is one term among several. Delivery schedule, payment period, minimum order, handling of faulty goods and notice of price changes matter as well. Confirm what you agree in a short message or purchase order, with dates, quantities, prices and taxes. If you are buying from a registered micro or small enterprise, be aware that Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 sets the time within which a buyer must pay, which cannot exceed 45 days from acceptance of the goods or services and is shorter where nothing has been agreed in writing. The tax treatment of late payments to such suppliers can also be affected. Rules can change, so check the current position with your accountant before agreeing payment terms.

Keep simple records

Maintain a vendor list with contact details, what they supply, agreed prices and terms, and who in your business deals with them. After each delivery, note whether it was on time, complete and in good condition. A few lines in a notebook or spreadsheet are enough. Match the order, the delivery note and the invoice before you pay, and keep your payments to the dates you agreed.

Review regularly

Once a quarter, or once a month for a critical vendor, look at your record. How many deliveries were late? How many had defects? Were problems fixed promptly? Have prices crept up without notice? Then decide: continue, raise a concern, ask for different terms, or begin looking elsewhere.

Raise problems early and specifically

When something goes wrong, speak to the vendor soon, with dates, quantities and photographs, and say what you need: a replacement, a credit or a revised date. A calm first conversation solves most problems. If one repeats, put it in writing.

A short checklist

Write a brief of what you need. Collect two or three candidates, including your current vendor. Compare the whole cost on one sheet. Check samples and references, and any licences or approvals. Place a small trial order with clear pass and fail checks. Confirm terms in writing, including payment timelines. Keep a vendor list and a delivery log. Review on a fixed date and decide what to do.

Choosing a vendor does not need a formal procurement department. It needs a brief, a fair comparison and a record, and the habit of looking at the record before the next order.