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Steel, aluminium, copper, cement, glass, cotton, coal, sand, wood – these are all examples of raw materials used in manufacturing, construction, energy and other industries in India. As raw material suppliers if you want to capture the market and emerge as the preferred supplier/distributor of specific raw materials, here are some tips and best practices you can follow to stay profitable, efficient and be the preferred raw material partner for sourcing and procurement in companies.
In India, the demand for different kinds of raw materials is at an all time high. Businesses are always in search of reliable, qualified raw material providers to ensure production is never adversely impacted. They look for the market reputation of the suppliers, type of raw materials offered, price of raw material, volume, packaging and transportation, area PIN codes covered, client list and more. Any raw material buyer will verify and validate all these details, and then onboard you as a trusted raw material distributor into the company.
In this article, we share some effective tips and strategies for you to keep in mind to seamlessly stand out from competition and get recognised as a reliable raw material supplier in India.
5 effective tips and strategies for raw material suppliers
If you are a MSME business owner, trying to make your mark in the market as a raw material manufacturer, this is not an easy market barrier to break. Most businesses, have their own pool of raw material vendors and prefer to do business with them. Moreover, the process of onboarding a new supplier is often rigorous and time-consuming, resulting in many businesses to continue working with their existing suppliers.Procurement is an essential part of every business. And, if you want to improve how procurement process work, you will have to do things differently. Let us understand it with some business tips for raw material suppliers:
1. Understand the market you want to operate in
The first thing you need to understand is the market. Not just competition, but the industry and the customers you are supplying to. Understand the demand, availability, buying pattern, legal and government compliances, taxes, logistics and transportation used etc.
Awareness of the market will help you in several ways including:
- Forecasting demand and planning inventory (i.e., procurement efficiency)
- Building a competitive pricing strategy
- Recognising trends and opportunities for growth
- Identifying buyer/seller pain-points and challenges to overcome
For instance, if you are a raw material supplier of cement, you know that logistics cost and supply chain is a constant challenge. Cement plants are usually remotely located (due to availability of limestone) and low consignment value increases transportation costs.
A solution to ensure that your shipping costs are reduced and delivery to customers are on time, consider partial truck loading. PTL shipping can be beneficial in such cases as you don’t have to pay for the entire truck, and only pay for the space you occupy. Moreover, there will be minimum stops, lesser loading-unloading and invoicing challenges.
2. Learn about the product and industry
Relevant knowledge about your products and industry will help you to stand out from competition. Whether you are selling steel or cotton, learn about the industry trends, challenges, ups and downs, government regulations and benefits/exemptions, and other details. Similarly, understand the type of products you are selling, its features, grades, composition, uses, benefits and more. This will ensure that when you pitch to a potential buyer you build confidence in your conversations.
For example, if you are a steel raw material supplier specialising in selling all types of steel such as galvanised steel, TMT bars, steel sheets etc. it’s imperative to know the demand for specific products across industries.
TMT bar raw material suppliers would know that there is a demand for TMT steel bars in the construction sector for buildings, dams, bridges etc. There are different types of TMT bars used in the construction sector and as a supplier you should be able to pitch the right type to the buyer. For instance, if the buyer is building residential homes, Fe 415 TMT bars is a suitable choice; on the contrary, if high-rise apartments are being built, Fe 500 grade TMT bars are better. The right TMT bars can reduce construction cost, hence building trust and credibility for your brand.
As a supplier raw material of steel, know your product and the industry to educate your buyer and pitch accordingly.
3. Get the required certificates and references
As a supplier of raw materials in India, there are certain certifications you may have to get. This will add credibility and assure buyers that your business is authentic and follows the necessary guidelines (e.g., safety and health, quality etc.) during manufacturing, shipping and distribution.
For instance, if you are s raw material manufacturing company for metals such as steel, getting an ISO 9001 certification is going to build credibility. Not all metal suppliers are ISO compliant. It takes time and the need to maintain quality standards to be ISO certified. You should also learn about the different IS code for steel in India.
This has several advantages from a business perspective. New buyers will find confidence in your product quality and be willing to negotiate better prices. Buyers understand that certificates (e.g., ISO 9001:2015, ISI mark for industrial products, FSSAI for food, Agmark for agriculture etc.) indicate quality, and even if you are a MSME business, will be willing to buy from you (since they do not have to doubt the quality of product).
Along with being a certified raw material supplier, also keep a list of customers/clients/buyers you have already worked with. Keep details on:
- Name and location of client
- Type/grade of raw materials bought
- Volume of raw material supplied at location
- Any testimonial received
If you have an e-brochure or pamphlet, consider sharing it as well.
4. Keep inventory and warehouse in check
A common mistake most new raw material suppliers make is not keeping a check on their inventory and warehouse. As such, if an unexpected purchase order comes it, they are unable to comply. Warehouse management for small businesses, is a challenge being faced across the country. As a smart raw material distributor, ensure that your inventory is always up and running.
Consider taking the following steps:
- Use relevant digital technology for automating and optimising processes. This will save you time and effort, reduce errors, and get data for analysis and insights.
- Inspect, repair, and maintain machines and equipment regularly, to ensure that there are no delays in production due to equipment breakdown.
- Plan inventory based on business data and market trends. For instance, if you are a steel sheets raw material suppliers in India, then based on trends you should be able to forecast the demand for stainless steel for cutlery in the food industry, or galvanised steel for irrigation pipes in agriculture, or carbon steel for car bodies in automotive etc. You can accordingly plan inventory so as not to miss out on any potential business opportunity.
- Partner with reliable third-party logistics companies for transportation. This will enable you to save costs, improve storage options, and deliver to customers in optimal conditions. Many 3PL providers have warehousing facilities and may be able to support you during times of high demand.
Remember, a potential buyer is unlikely to come back a second time if in the first time you did not have the adequate quantity of raw material requested. As such, if you want to succeed as a supplier of raw materials in India, ensure you have the stock to deliver when required.
5. Ask questions and be prepared to answer some
A successful buyer-seller relationship is one that is built on transparency, fairness, and collaboration. Whether you are a galvanised products raw material supplier in India or one distributing any other metal, wood, glass, cotton or any other raw material, it’s imperative that before you agree on a deal you ask few questions and get clarity on the scope of the project (and the buyer).
Some of the questions you may ask a potential buyer are:
- Nature/volume of order (single time or recurring, bulk or in parts)
- Type of raw material required and quantity
- Expected delivery timelines and location (to check serviceability)
- Decision makers for payments, approvals, etc. (to ensure that there are no delays in payments)
Some of the questions on which you should be prepared to answer to the buyer are:
- Pricing and payment terms (e.g., 20% advance and full payment on consignment delivery)
- Delivery options (e.g., door-to-door delivery, road transportation by trucks etc.)
- Quality of raw material (e.g., certified grades of steel)
- Minimum order quantity (if any)
- Taxes, compliances, and other charges applicable (e.g., GST)
Remember, your buyer will want to get the best deal monetarily without compromising on quality. As an industrial raw material manufacturer and supplier your goal should be to offer quality products at best-prices, keeping a standard profit margin.
Checklist for raw material supply
As a verified raw material supplier, now that you understand how to stay competitive and prepare to win new business, here is a checklist and the next steps for you:
- Be informed of the industry and market you are catering to
- Learn about your competitors (regional and national), understand their USPs, strengths and weaknesses for gaining competitive edge
- Follow up with buyers/clients consistently to ensure that they contact you for raw material supply
- Keep pricing competitive – this is usually where most buyers turn away
- Try to build a strong portfolio of clients to build credibility
- Get the necessary certificates for quality standards
- Work on warehousing space and logistics services – timely delivery can be your USP as late deliveries cause delay in the production process and no business would want it.
(This article was originally published in Feb, 2023 and updated in June 2023 for relevancy)