Finding new suppliers

A strong supplier base can help your business become more resilient in times of uncertainty.

Supply chains can be complex and fragile.

Having a strong supply chain, whatever your business model, is vital in giving you agility in times of change, and certainty that you can meet any surges in demand.

In this guide, we set out three steps that you could consider to make your supply chain work harder for you, all with a view to helping your business thrive during times of uncertainty.

Review your relationships with existing suppliers

Whether you're an independent retailer, a technology innovator, a service business or a manufacturer, it's likely that your suppliers are the key to ensuring you can deliver consistently to your customers.

If your supply chain is narrow - for example, you're a manufacturer and you have a limited number of suppliers of a bespoke item or component - there's a risk that those suppliers won't be able to meet your demand, making your own business suffer.

If a key supplier is suddenly unable to fulfil orders or to meet a surge in demand, this can have a detrimental, potentially devastating, impact on your business.

Conversely, if your business' supply chain is wide and diverse, this could create issues around quality control or compliance.

There's a cost in terms of time and effort in managing a large number of diverse suppliers, perhaps on different payment terms and contracts.

SWOT analysis

Create a SWOT analysis specifically related to your supply base.

The first step is to review your current suppliers to identify strengths and weaknesses, as well as both immediate and longer-term potential opportunities and threats related to supply.

Review payment terms, discounts and any exclusivity arrangements in place - are these clear and agreed in writing and, most importantly, are they fit for purpose?

Scenario planning

Look forward to the next three, six, nine and 12 months - and the longer term.

Map out the possible scenarios - for example:

• What would happen if a major supplier was unable to fulfil orders?
• What might happen if the quality of a particular supplier or contractor dropped?
• What might be the possible impact of Brexit?
• How might disruptions to international supply chains (for example, shipping from Asia disrupted by COVID-19) affect your business?
• What would be the impact on existing preferred suppliers if you were to diversify supply?
• How have you changed your business model, and what innovation do you have planned for the future?
• If demand for a particular product or service expands or contracts, do you have the agility to meet demand?
• What might happen if a new competitor enters the market?
• Are your supplier contracts so rigid that you can't make changes quickly?

Review your business plan

Revisit your business plan if you haven't already done so this year. Changes to your strategy may have a significant impact on your choice of suppliers.

Read our guide to reviewing your business plan

Create a plan to address gaps and opportunities

COVID-19 has exposed the weaknesses in long supply chains, especially those that cross international borders.

It's important to make sure that there's no single point of failure that could negatively affect your business' performance or delivery.

Supply chains could potentially become shorter or more diversified to meet the changing requirements of business.

To fill any gaps, and address potential opportunities, here are a few top tips:

• Research your competitors' supply chains to assess their strength.
• Assess the pros and cons of using local and international suppliers.
• Review contracts and supplier agreements to make sure they're still fit for purpose.
• Reach out to potential new suppliers - search engines, local directories, industry bodies, networking groups, business groups and LinkedIn can all be useful resources.
• Consider your offer to potential suppliers - why would they supply to you rather than to a competitor? How can you make your offer more compelling?

Financing change

Suppliers and contractors are looking for certainty - both in terms of demand, and also in relation to their working capital (cash) position.

If your business is more liquid (i.e. if you have more available cash) than your competitors', there are numerous advantages you can secure:

• Early-payment discounts
• Priority over competitors
• Ability to fund surges in demand
• Loyal and long-lasting relationships with suppliers

There are a wide range of debt finance and equity finance options available to improve your working capital position.

Many businesses adversely affected by the COVID-19 pandemic have taken out a Bounce Back Loan to give themselves a cash buffer.

At the same time, overdrafts and credit cards typically provide access to finance that costs your business very little until you make use of it (this is called discretionary finance).

As banks offer further forms of finance - such as factoring and invoice finance - your own bank is a great first port of call for working capital funding.

If you're aiming to grow and diversify by improving your working capital position, lenders can also support you with:

• crowdfunding
• peer-to-peer (P2P) lending
• supply chain finance
• specialist funding solutions such as pharmacy finance or e-commerce finance

Always seek the guidance of a trusted advisor or your accountant to explore which forms of finance could best support your business.