How to Pick the Best Vendors for Your Business

When it comes to running a small business, or any size business, it is vital to offer excellent products and services. To ensure your business does this successfully, it is important to establish a successful vendor selection process. This article will explain the best vendor evaluation criteria to consider before choosing a vendor for your business. 

1 – Determine Your Criteria 

The first step when picking the best vendor for your business is to determine your vendor evaluation criteria. These are the criteria that your supplier will need to meet in order to successfully meet your business’s needs. Vendor evaluation criteria include many factors, which could vary based on your business. 

Ask yourself, when selecting vendors for your company which of the following is important criteria to consider? These factors include the price, quality of product or service, ideal lead time, maximum and minimum order quantity, return policy, communication standards, and drop-shipping capabilities. You need to set your standards for all of these criteria factors. After you do so, you can start searching for a vendor who will meet them.

vendor selection


The price of the product or service you are looking for is one of the most important factors for determining vendor evaluation criteria. It is helpful to set a budget for the product or service. You want to receive the highest quality product or service for the lowest price. Be aware of vendor bids that are way lower than the rest. This can suggest lower quality products or services and likely require more research. 

Along with price, you want to look into payment terms and conditions. This is how and when you pay for the vendor’s products. Some vendors may only accept payment in certain forms, which may not work for your business. 

Quality of Product or Service

The quality of the product or service is extremely important because you want to ensure the vendor can provide the quality you are looking for. Price does not matter if the product is of poor quality.

This is where quality assurance processes are important. You need to establish ways to determine the vendor’s product meets your desired quality. One way to ensure this is to ask for samples of previous work. You can see their previous projects or get a sample of the product you are considering purchasing.  You can also get a better understanding of the product or service’s quality by the product descriptions. Look for product descriptions that are informative, clear, and concise

Ideal Lead Time

Ideal lead time is the amount of time you are willing to wait between placing an order and receiving your products. It answers the questions of how long will it take for your vendor to deliver your order. If you need a quick turnaround, you want a short lead time. This is an important factor to take into consideration to ensure you can meet your needs not just on budget but on time. 

most important criteria to consider

Maximum and Minimum Order Quantity 

Some vendors set a limit on your order quantity. Some set a maximum, meaning they are only willing to sell you a certain amount of the product. Others set a minimum order quantity, meaning you cannot place an order unless you order at least ‘X’ amount. 

When you are determining vendor selection, this something you want to look into. If your orders exceed the maximum order quantity, you will need to find a new vendor quickly. This is an issue you want to avoid. The same situation arises with the minimum order quantity. You may not need to order the quantity the vendor is requiring, therefore you need to find a new vendor. This is exactly why you want to find out the maximum and minimum order quantity before selecting a vendor. 

Return Policy

Before settling on a vendor, you need to look into their return policy. There can be times when you order a product and it does not work out. This can happen for many reasons. It can be that it wasn’t what you envisioned, you no longer need that product, or a number of other reasons. Make sure that the vendor you are choosing allows returns if you think that is something you might need to take advantage of.

Communication Standards 

You want to establish what your communication standards will look like with your vendor. How long are you willing to wait for a response to an email or call? Most likely, you will want a vendor who responds quickly. 

Another communication standard you need to establish is if you can communicate past language barriers. This is crucial when working with overseas vendors. If you cannot easily communicate, business will become difficult and time-consuming. Additionally, it opens the door to possible miscommunication on orders. 

Communication standards can also include customer service. Ideally, you want a vendor with superior customer service. This helps establish trust between you and your vendor. You know that if you have an issue, your vendor will help you solve it. 

One way to determine their communication standards is a vendor’s website. Do they offer a contact form for you to fill out with questions? Do they have online live agents available to assist you? If a website is not responsive, looks and feels outdated, has poor user experience, and has long load times, it can show the company is outdated. A website represents the company and if the website is outdated, it can say the same for the company. Additionally, an outdated website can make placing orders and communicating with the vendor more difficult. 

supplier selection criteria

Drop-Shipping Capabilities 

If you are looking for a vendor who can deliver products directly to your customers, dropshipping capabilities are a factor you need to consider for vendor selection. Dropshipping is not offered by all vendors. Therefore, you will need to find one who has this ability. 

Now, after reading about the factors that work together to establish supplier selection criteria, ask yourself that previous question. When selecting vendors for your company which of the following is important criteria to consider? Are there certain criteria you value more than others? It can be helpful to rank the supplier selection criteria. Make a list of which criteria are most important to you. This will help you in case you need to give up certain criteria for vendor selection.

2 – Look for Vendors

After establishing your supplier selection criteria, it is time to start searching for vendors who fit it. There are a few different ways to do this, but one of the most efficient ways is to use a supplier directory. These are sites that allow you to browse thousands of suppliers and their products in a single place. Five of the most popular supplier directories are Alibaba, DHgate, Worldwide Brands, SaleHoo, and Inventory Source. 

After finding vendors, it is time to evaluate them using certain criteria such as reputation, business type, and security. One way to learn about a vendor’s reputation is to talk to their past and current customers. You want to find a vendor that is reputable and trustworthy. Look for product testimonials on the vendor’s website. A testimonial is a statement from a previous or current customer that describes how they feel about a product or service. This will allow you to learn about the vendor’s customer-client relationship, as well as their products. 

The business type of vendor you need depends on your business. Do you need a wholesale supplier, a dropshipping supplier, or a private label manufacturer? This needs to be accounted for when searching for a vendor.

Lastly, security is important because you want a vendor who will protect your business. Most good vendors will provide insurance and fraud protection. 

3 – Call and Evaluate Bids

When you have a list of possible vendors, it is time to put out a request for bids. You might need to complete a Request for Proposal (RFP) or a Request for Quotation (RFQ) form. This is where you state what products or services you need, quantities, and delivery dates. This when you start the communication process with vendors. Not only should you ask them questions about their products and services, but also about the company itself. You want to get a feel for the company and if you think you two can work well together. 

After receiving bids, you need to evaluate them. This is where the vendor evaluation criteria is very important. You will find out if any vendors cannot meet certain criteria and will be given a price. You will need to review the bids to determine which is the best fit for your company. 

Once you choose a buyer, you will start negotiating contract terms. It is important to ensure the price in the contract is the one already decided on. If you are nervous about signing a long-term contract, you can ask for a short-term contract. This contract can act as a trial run to see how well the vendor works for your business. 

Vendor evaluation criteria

4 – Track Vendor Performance 

It is important to keep track of your vendor’s performance. If you realize that they are continuously shipping orders late, sending incomplete or incorrect orders, or sending low-quality products, communicate your concerns to the vendor. If it is something you do not think is improving, you may need to end your contract with your vendor. 

No matter how detailed your vendor selection process is, you can never know if a vendor will follow through on their promises. The only way to know for sure is to take a chance on them. 

Determining Vendor Selection 

Vendor selection is a crucial process for any business. You need to establish vendor evaluation criteria. Ask yourself  “when selecting vendors for your company which of the following is important criteria to consider?” This will help you determine which criteria you find the most important and are unwilling to negotiate. 

The next three steps after establishing criteria are: looking for vendors, calling and evaluating bids, and lastly track your vendor’s performance. Follow these steps to find the right vendor for your business. 

FAQs about Vendor Selection:

  • What steps should I follow to choose the best vendor for my business?
  • What vendor evaluation criteria should I focus on?
  • Where can I look for vendors?
  • How do I know if a vendor is trustworthy?
  • Why do I need to track my vendor’s performance?

Contact Us Today!

Call Now