Classification of suppliers

As a company grows, it will look to find more suppliers. What are the classifications of suppliers?

1.Strategic suppliers
Strategic suppliers are those suppliers that are strategically important to the company. They may generally be the only supplier, or there may be alternative suppliers, but the cost of substitution is high, the risk is high, and the cycle is long.
Strategic suppliers play a vital role in the survival and development of a company. If the company has suitable suppliers for this kind of cooperation, it will achieve a win-win situation, and there may be a double-lose if they are separated. Such suppliers should take a long-term view and cultivate long-term relationships.
So far, Hisight Optical has been a strategic supplier to many companies, securing orders for millions of pairs of glasses every year, achieving a win-win situation.

2.Preferred suppliers
Preferred suppliers they perform well, but they can be replaced. Companies are willing to do business with them first because of their overall good performance – such as price, quality, technology, service, etc.
Strategic supplier status is innate. They have irreplaceable technologies, products and processes. But the status of a preferred supplier is earned by themselves, they must excel in price, quality, delivery, service, etc.

3.Inspect suppliers
Inspect suppliers generally refer to providing their products and services to the company for the first time, and the company needs to observe its performance for a period of time.
There is also a situation where it was originally a preferred supplier, but for certain circumstances, they made some mistakes and did something that was harmful to the company’s interests. However, out of affection, the company will also observe for a period of time and make a decision based on its subsequent performance. After the inspection, either upgrade to a priority supplier, or downgrade to an eliminated supplier.
For such suppliers, we must pay more attention.

4.Negative obsolete suppliers
Negative obsolete suppliers won’t get new business, but companies won’t voluntarily remove existing business. Such suppliers must be treated rationally, and if the performance is okay, don’t upset the balance between them. It is important to maintain a relatively good relationship.

5.Aggressively obsolete suppliers
Not only do Aggressively obsolete suppliers get no new business, but existing business has to be removed. This is the most extreme case in supplier management. Suppliers may maliciously raise prices or delay delivery, so you must find a good home for yourself to prevent relatively large losses.

Taking a win-win approach helps build professional, open and trusting relationships.