Finding a reliable, quality vendor is about partnering with manufacturers who provide the mission-critical goods and services you require; however, the process of vetting vendors also involves risk. As the current business climate grows more competitive (and risky), the ability to accurately evaluate your supply chain management system is crucial to the success of your company.
A key aspect of your supply chain management system is the ability to choose reliable vendors and suppliers who ensure a quality product and delivery service. Assessing vendors should include insight into past performance, potential legal issues, and insurance compliance.
More than ever before, brands are changing at a rapid rate. Whether you’re adding new products, making changes to existing products, or offering additional features, you should have absolute confidence in your partnered vendor to produce the products you need, when you need them.
As a direct-to-consumer (DTC) brand, your ability to conduct business heavily relies on the quality of your vendor; otherwise, your operations will come to an abrupt halt. Below, we’ve provided five DTC tips for effectively vetting vendors to ensure product quality.
1. Perform Thorough Vendor Due Diligence
The best DTC tip to get to know your vendors is by conducting vendor due diligence (VDD).
Building a strong vendor onboarding program should start with assessing your vendor’s potential involvement in illicit activities, such as money laundering, fraud, and terrorist financing.
The VDD process involves your vendor submitting information regarding the company’s legitimacy. Request documents like a W-9, state and local licenses, and certificates of insurance. This information will allow you to verify the company’s IRS status, confirm its ability to legally operate, and protect your company from potential high-risk incidents.
Additionally, conducting VDD includes analyzing your vendor’s expertise and suitability for the job you demand. Request the vendor’s list of policies, procedures, and training materials; it might seem like a hassle, but this extra step will ensure the internal operations of the vendor are qualified for the needs of your brand.
2. Assess Vendor Efficacy
Making the decision on which vendor is right for you depends on their ability to meet your demands — both short-term and long-term. First, inquire about their financial efficacy. Since vetting vendors involves high risk, you have every right to clarify their financial stability.
If they don’t meet your financial standards, consider running an evaluation period by offering a short-term contract. That way, you aren’t obligated to them long-term if they can’t meet those demands.
Then, assess their current infrastructure. A quality vendor should be able to support the volume of products you need. By touring their facilities and gaining insight into their internal operations, you can determine if they’re a good fit for your brand.
This will also offer greater visibility into their supply chain management system. If issues arise or something goes wrong, you need to be able to rely on your vendor to accommodate such unexpected events. By observing their supply chain, you can determine how robust and reliable they will be in the case of changing circumstances.
Another great way to assess a vendor’s efficacy is by layering more about their existing customer base. This step might require a bit more research on your part, but it can offer great insight into the future nature of your relationship with the vendor.
If you do not have a stronger relationship with one client than the others, this might be an indicator that they’re overly reliant on this client — which could pose some issues for your future relationship.
3. Set Expectations and Contract Considerations
Communication is key — and often over-repeated DTC tip for vetting vendors, but an important aspect nonetheless. Your vendor is the beating heart of your organization, as they’re responsible for driving new growth and ensuring your ability to reach profit goals. Therefore, building and maintaining a quality relationship with them should be of utmost importance.
Establishing clear communication can avoid confusion, misinformation, or potential hiccups in the manufacturing process. Whether it’s touching base every now and then or setting up formal, scheduled meetings, make sure you’re continually taking steps to build a successful partnership.
Likewise, be open about expectations and contract considerations. Your company should be able to really convey the necessary vendor responsibilities, as well as consequences for failing to do so.
While this part of the vetting process can be uncomfortable, agreeing on policies, communicating procedures, and making sure your vendor understands consequences for unfair, deceptive, or inappropriate behavior or practices is an absolute must.
4. Verify Safety and Quality
Since you’re putting your operations in the vendor’s hands, you must have confidence in the safety and quality of their operations. Verify that the vendor is consistent in meeting safety guidelines and practices, as well as plans in case of a disaster.
From floods to fires, to system failures, there are dozens of unexpected risks that could affect operations; so it benefits both you and your vendor to secure plans for disaster recovery.
Performing an OSHA Citation and Violation search will also offer greater insight into any safety hazards they might be harboring. Understanding the OSHA standards will help you and your vendor avoid hefty fines and penalties in the future.
Remember: no matter the crisis, your customers will expect business as usual. You need to ensure that your vendors can continue to deliver on product quality, whatever the situation.
5. Review Vendor Past Performance
Entering into a contractual relationship with a vendor is no small matter. You’re entrusting them with some of the most important aspects of your business, and failing to gain insight into past performance can result in significant ramifications.
Whether it be their financial history, past judgments, and other public records can reveal any risk indicators. And don’t underestimate the power of technology. With advanced media screening powered by artificial intelligence, you can gain in-depth knowledge and identify potential threats.
Vetting vendors is imperative to ensure product quality and delivery. Adopting a strong vetting process can help you quickly identify critical factors that might affect your future relationship with the vendor. By following the above DTC tips, you can successfully select a vendor that’s right for your company.
At Manufactured we make sure all of our private label products mean the quality standards of all of our clients.
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