How to regularly review supplier pricing and terms

Why you can't afford to 'set and forget' your suppliers

When you first started out, you probably spent a lot of time finding the right suppliers. You found people who provided good quality stuff, delivered on time, and gave you a decent price. But here’s the thing: the market never stands still. Prices change, new suppliers pop up, and the deal that was great a year ago might be just average today.

Regularly checking in on your supplier arrangements isn't about being disloyal. It’s about being a smart business owner. It ensures your costs don't slowly creep up and eat away at your profits, and it keeps your business competitive. Think of it as a regular health check for one of the most important parts of your business.

How often should I review my suppliers?

There's no single magic number, but a good rule of thumb is:

• For your most important supplies: These are the things you buy most often or that make up a big chunk of your costs (like coffee beans for a café or key ingredients for a food truck). It’s wise to check the market for these every 3-6 months.
• For everything else: For less critical supplies, an annual review is usually enough to make sure you’re still getting a fair deal.

Top Tip: Pop a reminder in your calendar! It’s an easy task to forget, so schedule it in just like any other important business appointment.

A step-by-step guide to reviewing your suppliers

Ready to make sure you're getting the best bang for your buck? Here’s how to do it without causing any drama.

1. Know Your Numbers: Before you can compare, you need to know exactly what you're paying now. Dig out your recent invoices from your current supplier. Don't just look at the headline price; make a note of the price per unit (e.g., per kilo or per item), any delivery charges, and your payment terms (e.g., do you have to pay upfront or do you get 30 days?).
2. See What Else Is Out There: It’s time for a bit of window shopping. The goal is to get a clear picture of the current market rate. You can do this by:
   • Searching online for alternative suppliers in your area.
   • Asking for recommendations from other business owners in your network.
   • Getting a few quotes. Contact two or three other potential suppliers and ask them for a price list for the same items you currently buy. Be specific about the quality and quantity you need.
3. Compare the Whole Package, Not Just the Price: The cheapest quote isn't always the best deal. A supplier might be 5p cheaper per item, but if they have a huge delivery fee, are unreliable, or offer poor quality, it's a false economy. Compare your quotes based on:
   • Quality: Is the product as good as what you currently get?
   • Reliability: Do they have a good reputation for delivering on time?
   • Delivery: What are the costs and how flexible are the delivery slots?
   • Payment Terms: Do they offer credit, or is it payment on delivery?
   • Customer Service: How easy are they to deal with if something goes wrong?
4. Have a Chat with Your Current Supplier: This is the most important step. Armed with your research, schedule a friendly call or meeting with your current supplier contact. You could say something like: "Hi [Name], I'm doing my regular review of costs and I've found I can get [Product] for [Price] elsewhere. I really value our relationship and would prefer to stay with you. Is there anything you can do to match this price or improve our terms?"
5. Make Your Decision: After your conversation, one of three things will happen. They might match the price, in which case, brilliant! If they can't, you need to decide if the benefits of staying with them (like their reliability or service) are worth the extra cost. If not, it might be time to make a switch. If you do decide to move, always do it professionally and thank them for their service.

A few final tips

• Relationships matter: Building a good, professional relationship with your suppliers can lead to better deals and more flexibility when you need it.
• Don't burn your bridges: The business world is small. Always be polite and professional, even if you decide to switch. You never know when you might need that supplier again.
• Think about bulk buying: Sometimes, ordering a larger quantity can unlock a lower price. Just be sure you have the space to store it and the cash flow to afford the bigger upfront cost.

Making supplier reviews a regular part of your routine is a powerful habit. It keeps you in control of your costs, protects your profits, and ultimately helps you build a stronger, more resilient business.