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Are you thinking about changing suppliers?

As a business owner, you need to work with suppliers who can provide you with the right goods and services at the right price within in the right timeframes.

Although the preference is to develop a good relationship with your suppliers and resolve supplier disputes, there will be times when you decide that you need to change to a different supplier.

Changing suppliers is a big decision, so it’s important to consider all your options to ensure your decision delivers the best outcome for your business.

What is a supplier and what types of suppliers does your business use?

Suppliers don’t only supply your business with products and physical supplies—suppliers can also refer to other service-based businesses you use.

Here are some other examples of who your suppliers might be:

  • banking and financial services
  • utility services such as electricity or gas
  • property suppliers such as businesses that you rent or lease property from  
  • internet and phone services
  • insurance products
  • office supplies
  • other items your business needs to be able to trade.

How do I know if I need to change my business’s suppliers?

Every business is different and the reasons for changing suppliers will depend on the type of business you run, your industry and your business’s situation.

Here are some common reasons you might need to change:

  • You’ve found another supplier that’s better value for money.
  • You need to cut down on your expenditure to increase your business’s bottom line.
  • Your business has grown and you’ve found a supplier that can better fulfil your business’s growth. This could involve changing to an interstate or overseas supplier.
  • Your current supplier is closing their business, or no longer stocking the items you need.
  • Your current supplier contract is expiring and you want to check out other suppliers before resigning.

Whatever your reason, make sure you take the time to go over your decision carefully. Changing suppliers will mean having to rebuild trust and relationships, which can take time and energy.

What do I need to think about before I change suppliers?

Before you change suppliers, here are some things you’ll need to consider:

  • Check your current contracts or leases before you do anything.  There may be clauses that prevent you from changing or breaking the contract until the end of the contract term. Make sure you’re aware of any penalties in your contract you may have to pay if you do decide to break the contract and change.
  • Consider how changing suppliers will affect your business as a whole and your customers. For example, if you change suppliers will you still be able to maintain trading at your current level or will there be a transition period? If so, it’s important to consider how you'll communicate this change to your customers and staff.
  • Make sure you have enough stock on hand to maintain your trade if the changeover isn’t smooth as you’d have hoped.
  • When engaging the new supplier, make your new contract or service is right for your business. Check the timeframes, costs and research the potential supplier thoroughly before you make the change.
  • When sourcing new products, remember that you’re legally responsible for product safety. Read the Australian Competition and Consumer Commission’s (ACCC’s) Responsible sourcing of products page for more information.

Remember - it might be more cost effective to stay with your current suppliers and renegotiate your contract. Make sure you consider all your options before making the switch.

This content was first published on business.gov.au

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