This is the third in a three-part series on how to get your business on a preferred supplier list (PSL). Our webinar will take you through the standard process that’s usually required to get on a preferred supplier list.
Do you want to increase your sales, partner with major companies and boost your international credibility? If you can become a preferred supplier to a large prime contractor, all these benefits may be within your reach.
Being on a preferred supplier list (PSL) will not only increase your sales, but will boost your reputation as a dependable partner to a large corporation, which will increase your credibility and can help you network your way to other partnerships.
How does a business qualify as a preferred supplier?
The answer will vary with each company and prime contractor (primes), but in general, the process will resemble the one below.
Know what you’re good at
Being a successful business with international customers, you probably already know what you do best and where your competitive strengths lie. Still, when you’re presenting yourself to a much larger, multinational company, it won’t hurt to re-evaluate what you can offer them. Ask yourself these questions:
How can my products or services contribute value to prime contractors in my sector?
Can I tailor my offering so it can be more appealing to potential target primes?
Given my capabilities, what else could I provide that I’m not already offering?
Communicating that you understand their needs and how your products or expertise can provide solutions, primes will be more likely to recognize your value as a long-term partner.
Once you’ve found the most promising possibilities, do additional research to find out what products and services these contractors need for their operations, and identify which best match your capabilities. These companies will make up your shortlist of target primes.
Understand their corporate culture
Gather as much information as you can about the primes on your shortlist. Comb their web sites, read their annual reports and check out their social media presences.
If you know a lot about the primes before you talk to them, it will be easier to demonstrate how your company’s value proposition dovetails not only with their needs, but also with their business and operational culture.
Research your competition
Find out as much as possible about your competitors for your target primes’ business. How long have they worked with their primes? How close is the relationship? What kind of work are they doing and how much? Can you identify where you have a competitive edge?
Make the initial contact
Primes that use subcontractors normally have a procurement division, a purchasing department or some equivalent. Contact the appropriate office and set up an initial meeting.
When you meet, try to find out whether your goals and the prime’s are well aligned, and whether the company can offer you worthwhile opportunities. Determine what information and documentation they’ll need during this process and obtain their preferred-vendor application forms.
Complete the application
Collect the information primes will need when they consider your application and fill out the forms as thoroughly and accurately as possible. If in doubt about anything on the application, ask the company to clarify it.
Present your case
Submit the application and arrange a call to present it. Make it clear that you understand the prime’s needs and pain points, and show how your products or services can provide the necessary solutions.
Submit to a qualifying evaluation
If a prime is seriously considering you as a preferred vendor, it will likely require an evaluation before proceeding. This is to ensure that you’re qualified and that you have the capacity to meet the prime’s subcontracting requirements.
The evaluation may simply be a review of your financial statements, performance records and credit history. In other cases, the prime may want a site visit to your plant or facilities. If you pass muster and the prime decides to do business with you, you may land a contract and you may be added to their PSL.
Don’t rest on success
While it will be gratifying to make the PSL of one or two large primes, becoming over-dependent on them can be all too easy. The risk here is obvious: If one of them no longer needs what you produce, or decides to work with another subcontractor, you may lose a big chunk of your business practically overnight. For this reason, it’s a good idea to get onto the lists of several different primes. Diversifying across several primes in your sector or related sectors can also help your company grow more quickly.
Preferred supplier lists (PSLs) save time and effort for many large companies and governments because they can choose from a pre-qualified list instead of requesting a proposal or tender every time they need materials or services. Your business can leverage PSLs to grow into new markets.