Supply chain

Supplier selection process


March 5th, 2017

I have a Medical Equipment Sale and Service Startup and we are in the process of creating a portfolio of products to market.

I am dealing with a known supplier who is already in business with a former employer who is already selling this unit and soon ( as they told me) will become their distributor.

I have asked permission from the supplier to re-sell one of their most attractive equipment as I am very familiar with the unit in terms of faults and ability to quickly resolve them.

However, I have been offered (from the supplier), to sell two different units, which in my opinion don't have the same marketability and appealing.

1) Knowing that the competing company is ahead of the game; Am I right to proceed with the supplier discussions or should I look a different supplier? 2) Is it likely that we will have a better hand in repairing the equipment we are interested in, as I feel that we have an engineering competitive advantage in comparison to the other company?

Any help is greatly appreciated.

Michael Bennett Engineering skillset with an entrepreneur mindset.

Last updated on March 6th, 2017

To answer your questions -

1) You should evaluate how this supplier will treat you in relation to the other, larger company that it is supplying the same product to. If you feel that you will be offered pricing and support that will not allow you to be competitive then you should not get in business with the supplier.

2) Your service to your customers could be your competitive advantage, however engineering is only a small part of that. If your units can be repaired easier and break less often you could still be at a disadvantage to a larger competitor who can execute repairs faster because they have more technicians available and can source repair parts cheaper and/or faster due to a better supply chain.

Giona Pedditzi Entrepreneur, Founder, Consultant

Last updated on March 8th, 2017

Great answers! Thank you.

We compete with other SMEs in a niche area for now. But sure, a large competitor can be very responsive in resolving technical issues with superior manpower, however, for the kind of repairs we plan to carry out now, we try to become a specialised repair centre with a exclusive rights to fix certain units sold by us/others in our market.

Superior tools, faster responses, advanced knowledge with competitive price is our goal and should give us an edge. From what it was observed in our field, our main competitor used low skilled/paid manpower which was not up to the task for shop repairs and jobs seemed regularly subcontracted to expensive external professionals.

As we grow, we will definitively, have the problem to compete with bigger organizations. This is the key for us. As we establish personal/closer relationships with the customers, we hope to increase the business by repeated sales and building a great reputation.