Grow Your Business

Rey Calooy knows what it’s like to hunt for good suppliers, and to be one himself. He is president of RNC Marketing based in Talisay City, Cebu, which currently supplies sachets of coffee, sugar, and creamer to Starbucks, Bo’s Coffee, the Manila Hotel, Chowking and Jollibee, and to several other companies in Manila and Cebu.

Also president of the Filipino Cebuano Business Club Inc., a 5,000-strong group of micro, small and medium enterprises in Cebu, Calooy is legendary in the province for growing his business from scratch, initially as a supplier of dust rags for furniture companies (talk about rags to riches). Showing his entrepreneurial drive, Calooy constantly shifted his business to serve the needs of his potential customers, until he reached the top companies in the country.

Being the classic middleman—buying supplies from one company to sell to another, profiting from the margins he adds on—Calooy has the following pieces of advice on how to assess your own suppliers:

Treat suppliers as partners.

Many business owners think because they give suppliers business, they can exploit the latter by asking for personal perks and unreasonable demands. “They seem to get this issue backwards,” says Calooy, who reminds entrepreneurs that almost every business, whether they make a product or service, is dependent on suppliers. Make suppliers part of your strategic business plan, he advises, and be loyal to good, reliable ones. “You must build a good relationship with your suppliers the same way you do with your customers,” he adds.

Look for quality.

The materials your supplier provides you directly affect the quality of your products. “If your products are of high quality, your customer is more satisfied and returns less of your goods, which boosts your cash on hand and profit,” Calooy says.

Calooy says timely deliveries “are crucial to how customers see how reliable [suppliers] are.” Remember that a quick turnaround can help minimize your inventory, minimizing the risk of your inventory going to waste.

Lean on their competitiveness.

Suppliers can give you the edge over your competition given their knowledge of the industry, access to technology, and pricing strategies, Calooy says. Suppliers are innovators, too. If you’re developing a new product, suppliers can help; they know the potential of their products more than you do, Calooy says. “Good suppliers will understand your business, your industry and your needs, and can help develop your idea,” he says.

Suppliers are also financiers. If your supplier thinks you’re a considerate, loyal and paying customer, he just might be willing “to extend terms of payment on your future purchases, postpone collecting on your debts, grant you a loan, or even invest in your company,” Calooy says. All of these improve your cash position—and help your business grow.

Calooy adds this nugget of wisdom: “Always pay your suppliers on time, give them enough lead time to fill your order, visit their offices sometimes, and share information with them. All of this helps you build a good relationship with your suppliers.”