How to evaluate and onboard new suppliers systematically
Most Indian companies onboard suppliers based on a recommendation, a price quote, and a gut feel. This works sometimes and fails expensively at others. A systematic supplier evaluation takes 2–3 hours and prevents months of supply problems.
Define your evaluation criteria before you start looking. The criteria should cover: quality (do they meet your specifications? what is their rejection rate with other clients?), delivery reliability (what is their on-time delivery track record?), financial stability (are they likely to still be operating in 2 years?), technical capability (can they handle your volumes and specifications?), and compliance (are they GST registered, legally compliant, and able to provide proper documentation?).
Conduct a supplier audit before significant first orders. For critical suppliers, a visit to their facility is worth the time investment. You're looking for: cleanliness and organisation of their facility, quality processes and equipment, their production capacity versus what they're claiming, and the quality of their management team. What you see in one visit tells you more than months of email correspondence.
Run a trial order. For any new supplier, place a smaller-than-normal trial order before committing to full volumes. Evaluate the trial against your criteria: was the quality to specification, was delivery on time, was documentation complete, and how did they handle any issues? A supplier who handles a trial order well is likely to handle your ongoing business well.
Document the evaluation and the decision. A simple supplier evaluation form — filled out and filed — creates a record and ensures you're applying consistent criteria. It also protects you in any audit that questions why you chose a particular supplier.
Define onboarding requirements. Before a supplier goes on your approved vendor list: their bank details are verified, their GST certificate is on file, a non-disclosure agreement is signed (for suppliers who will see your product designs or processes), and your quality and delivery standards are agreed in writing.