Questions to Ask a Supplier
Questions for a buyer, owner, or operations lead evaluating a new supplier of goods. They cover lead times and minimum orders, how price is built up, defect and on-time performance, who actually manufactures, shipping terms, and what protects your drawings and tooling.
The questions
Open any question for the note
What is your lead time from purchase order to delivery, and what was it actually over the last three months?
Why ask it
The quoted figure and the recent figure are often different, and the gap is the number you should plan against. A supplier who cannot describe their recent performance is not measuring it, which means you will find out during your own stockout.
What is your minimum order quantity, and will you take a smaller first order?
Why ask it
Minimums are frequently softer for a first order than the price list suggests, especially if you accept a higher unit price. Suppliers who will not flex at all on a trial quantity are telling you your volume does not interest them.
What are your payment terms, and what do you require from a new customer specifically?
Why ask it
Expect a deposit or prepayment at first, moving to terms after a few clean orders. Ask what triggers that transition, and get it stated, because paying everything up front on a large order removes your only leverage if the goods are wrong.
How is the unit price built up, what is included, and what would cause it to change?
Why ask it
You are looking for the components: material, labour, tooling amortisation, packaging, freight. A single all-in number with no breakdown makes it impossible to argue later when they cite raw material costs for an increase.
At what quantities does the price change, and what are the break points?
Why ask it
Named break points let you decide whether ordering more is worth the inventory cost. Vague promises of better pricing at higher volumes usually mean the discount will be negotiated from scratch every time.
How much notice do you give before a price increase, and has that happened in the last year?
Why ask it
Ask for a notice period in writing, ninety days if you can get it. Whether they raised prices recently, and how they told customers, predicts how the next increase will land on you.
What is your on-time delivery rate, and how do you define on time?
Why ask it
Definitions do the work here: measured against the original promised date or a revised one, at dispatch or at your dock. A supplier reporting high performance against dates they rescheduled themselves is reporting nothing.
What is your defect or rejection rate on this product, and how do you know?
Why ask it
Look for a figure tied to a measurement method rather than a claim of high quality. Suppliers who have never had a rejection either have very few customers or are not being told when goods fail at the other end.
When a shipment fails our inspection, what happens: who pays for return, rework, replacement, and freight?
Why ask it
Settle this before you order, because it is the most expensive ambiguity in any supply arrangement. Freight on a rejected container can exceed the value of the goods, and no one volunteers to pay it after the fact.
Who inspects before goods leave your facility, and will you send me the inspection records with each shipment?
Why ask it
Ask what is actually checked, on how many units, and against what document. A supplier willing to attach measurement records to each lot is one that expects to be held to a specification.
Which certifications and test reports do you hold, and can you send the certificates with their expiry dates?
Why ask it
Certificates are easy to claim and easy to verify, and expired or borrowed ones turn up regularly. If a certificate names a different company or site than the one you are buying from, you are dealing with an intermediary.
Do you manufacture this yourself, or is any of it subcontracted, and to whom?
Why ask it
Trading companies presenting themselves as factories is common, and it adds a margin and a layer between you and any problem. Ask which processes happen under their own roof and which do not.
Where do your own critical materials come from, and do you have a second source?
Why ask it
Your supply is only as reliable as their upstream supply. A supplier who names their material sources and has a qualified alternative has thought about disruption; one who has never considered it will simply pass a shortage to you.
What is your current production capacity, and how much of it is already committed?
Why ask it
The relevant number is spare capacity, not total capacity. It also tells you what happens in their peak season, when your order competes with a larger customer's.
Roughly what share of your output goes to your largest customer?
Why ask it
High concentration cuts both ways: that customer's priorities will outrank yours, and their departure could take the supplier down. Suppliers usually answer this in general terms, and a refusal to answer at all is itself a signal.
How long have you been trading, and will you provide financial statements or a credit reference?
Why ask it
You are checking whether they will still exist mid-contract, especially before paying deposits or funding tooling. Reluctance is not automatically damning for a small firm, but it should change how much money you place at risk.
Which shipping terms are you quoting, and under those terms who pays freight, duty, and insurance, and where does risk transfer?
Why ask it
A quote is not comparable to another quote until you know the Incoterm behind it. Ex works and delivered pricing can differ by a large margin, and the term also decides who is responsible if the goods are damaged in transit.
Can we visit the facility, or send a third-party inspector before shipment?
Why ask it
Willingness matters more than whether you go. A supplier who resists an independent pre-shipment inspection, which you would be paying for, is protecting something you would want to see.
Who is my named contact, and who do I reach when something goes wrong outside their hours?
Why ask it
Get a name, a direct number, and an escalation point above them. Problems with shipments happen at inconvenient times, and a general sales address is where urgent messages go to wait.
If you cannot fulfil an order, how much notice would I get, and would you offer a partial shipment or an alternative?
Why ask it
Every supplier misses sometimes; what distinguishes them is whether you hear about it three weeks early or on the promised date. Ask for a recent example and what they did for that customer.
If I share drawings or specifications, what protects them, and who owns tooling I have paid for?
Why ask it
Tooling paid for by you but held by them is a common way buyers get locked in, so agree in writing that you may take it elsewhere. Also ask explicitly about producing your design for anyone else, since a non-disclosure agreement alone does not cover that.
Qualifying and managing a supplier
Practical guidance for the conversation itself
Before the first order
- 1Write a specification before you ask for a price. Dimensions, tolerances, materials, finish, packaging, labelling, and what constitutes a defect. Everything afterwards is measured against this document.
- 2Ask three suppliers for a quote on the same specification and the same Incoterm, so the numbers are actually comparable.
- 3Order samples, then order a small production run. Samples are made by the best operator on the best day; the trial run tells you what normal looks like.
- 4Verify the company independently: registration, address, the name on the bank account matching the name on the invoice. A payment redirected to a different account is the most common sourcing fraud.
- 5Speak to two current customers of theirs, and ask specifically about the last thing that went wrong and how it was resolved.
What belongs in writing
- The specification, with tolerances and an agreed acceptable defect level, referenced by the purchase order.
- Lead time from a defined trigger, such as receipt of deposit, rather than from the order date.
- Price, currency, validity period, and the notice required for any change.
- The Incoterm, so responsibility for freight, insurance, duty, and risk in transit is unambiguous.
- Inspection rights, including third-party pre-shipment inspection, and what happens to a rejected lot.
- Ownership of tooling, moulds, and drawings, and your right to take them elsewhere.
- Confidentiality plus an explicit restriction on producing your design for anyone else.
- How either side ends the arrangement, and what happens to work in progress and open orders.
Warning signs
- A price well below every other quote. Something has been left out, usually the material grade or the freight.
- Reluctance to name the factory, or a certificate issued to a company with a different name.
- A request to pay a different bank account than the one on the contract, or a change of account details by email.
- Vague answers on lead time and capacity, which usually mean your order will be slotted around larger customers.
- Resistance to any written agreement, or to your inspecting goods before they ship.
- Quality that is excellent on the first two orders and drifts on the third. This is common enough that inspection should not stop after a good start.
Once you are buying
Keep a simple scorecard
On-time delivery against the original promised date, rejection rate, and response time to a problem. Three numbers per supplier, reviewed quarterly, are enough to make an evidence-based decision about renewing or replacing.
Qualify a second source before you need one
Run a small share of volume through an alternative supplier so the relationship is live. A second source you have never ordered from is a phone number, not a contingency.
Share forecasts, and pay on time
Suppliers allocate capacity to customers who are predictable and who pay. A rolling forecast, even a rough one, buys you priority that negotiation alone will not.
Do not let inspection lapse
Reduce inspection frequency as a supplier earns it, but never to zero on a critical part. Quality drift usually appears after the relationship feels settled.
Watch for financial distress
Requests to change payment terms, slower responses, staff turnover in your account, and part shipments arriving where full ones used to are the early signs. Reduce exposure before it becomes a write-off.
If the supplier is overseas
- Total lead time is production plus ocean or air transit plus customs clearance. Ask for each separately rather than a single figure.
- Confirm which party is the importer of record and who pays duties and any applicable tariffs. This is decided by the Incoterm, not by goodwill.
- Agree the currency and who carries exchange rate movement between order and payment.
- Check whether your product needs specific import documentation or testing in your market, and who is responsible for providing it.
- Expect a shutdown period around major national holidays in the supplier's country, and place orders well ahead of it.