It’s important to know how to judge whether your suppliers are reliable. The so-called “reliable,” in my understanding, is that companies are dependable and practical and never two-faced. They do not fabricate anything and have a good development prospect. I have done more than ten years of due diligence, including cooperation, M&A, listing, and investment. I would like to share some of my own experiences here for your reference.
1. How to judge whether your suppliers are reliable: Asking questions
You could pay attention to whether the company’s executives can directly answer your questions. This allows you to observe whether different people’s answers on the same question are consistent.
I communicated with the vice president of a company and asked whether their company cooperated with a company in the UK. The vice president replied, but did not answer my question. Half a year later, I came to know that their company was actually working with a company in the UK.
When we ask different people the same question, such as, “Why is your company not doing business in the United States?” If the chairman attributes it to limited production capacity, but the deputy manager responds that it is because their products do not meet the import and export regulations, then, the company is likely to have problems. Similarly, if the same person’s statements about the same problem are inconsistent, it means that the company is hiding something from you.
2. How to judge whether your suppliers are reliable: Seeing work efficiency
Seeing their work efficiency, such as the speed of providing materials.
This is the real experience of my friend who is an accountant. My friend once approached a company to be listed for an annual review. He found that the company provided most of its financial information fast. However, the company did not provide some financial books and contracts, so my friend asked where these documents were. The company’s response was always that it was looking for and ‘sorting out’ these documents. What’s surprising is that they were lying. One day, my friend worked late at the company. When he about to leave, he saw that there was a light on in the warehouse-like place next door. Upon closer investigation, he found out that it was the people in the finance department who were working overtime to create the missing financial books and contracts. This was proof that the company was not reliable or trustworthy.
3. How to judge whether suppliers are is reliable: Looking at their documents
You could see whether the company’s documents are complete, orderly and carefully arranged.
I’ve seen a company make three versions of the employee handbook before and after. Not only that, their layout of each edition is neat and beautiful and the content has been updated according to the latest labor laws and regulations. What’s more, their handbooks are with actual cases attached, which is highly operational. Such a company must be very dependable and meticulous.
Generally speaking, only when the company has complete staff and strong working ability, can it have the ability and willingness to continuously improve the details of data management, and organize the system and documents in order.
4. How to judge whether supplier is reliable: Visiting the production site
Checking whether the materials in the production site are placed in order and whether the equipment is maintained.
For production and processing enterprises, the production site or workshop is the place to reflect their management level. In order to improve work efficiency, the marks and markings in the workshop of a reliable company must be clear and accurate. In such a workshop, materials are placed neatly, their workers are calm and orderly, and their uniforms and signs should be neat and unified. We should not underestimate these details, which can only be summed up after years of production practice. Even if some companies learn from others, it takes more than a year to refine these details.
5. How to judge whether your supplier is dependable: Chatting with them
You could talk about the market and technology with the company’s executives to see whether they know each other in a large, wide or detailed way.
After chatting with many executives about the company’s foundation and prospects, I found a phenomenon. The more general their answers are, the less reliable the company is. The more detailed their answers are, the better it is. That is to say, if they talk about government policy support, broad industry prospects, and familiarity with a famous person in the first place, the situation of the company may be relatively unreliable. However, if they are very clear about the company’s situation and can point out the shortcomings of their products, they are often more reliable. Moreover, such a company will analyze its advantages, disadvantages and market conditions comprehensively and objectively.
6. How to judge whether your supplier is dependable: Seeking the help of a third company
Seeking help from a professional team, such as Verifyfull.
Maybe you think the above five ways are not practical due to time, transportation and other factors. Or you worry that the supplier will pretend that everything is going well in order to make you trust them. In addition, if you go directly to your suppliers, they are likely to refuse your visit or say that you can visit their company only if you cooperate with them first. In such a case, it is a very wise choice to ask a third-party professional team to help you investigate your suppliers. They look up vendor registration information, check the company’s reputation and history, investigate their annual returns, and more information you need to know. Verifyfull is such a professional company. It helps you judge whether the supplier is reliable in a more professional and objective way.