Suppliers and supplier agreements
If your lemonade stand buys lemons from one farm and the farm runs out, you have no lemonade. A good shop owner knows several farms, tests the lemons first and writes down what each farm promised.
- Before this course: Scaling an Online Shop (course 2.6.3), which came after Selling Online Courses and Digital Products (course 2.7) and Start an Online Store (course 2.6). You already know contribution margin, CAC, ROAS, email flows, LTV and the Canadian rules on ads and pricing. This course is about the work behind the order: suppliers, shipping, stock, returns, rules and people.
- Key supplier terms: unit cost, minimum order quantity (MOQ), lead time (days from order to arrival), payment terms, quality standard, defect handling and who pays shipping.
- Always order samples before a big order, and check them against your written product specification.
- A supplier scorecard tracks on-time delivery, defect rate, price changes and how quickly they answer. Review it every quarter.
- Do not depend on one supplier for your best-selling product. Qualify a second one before you need it.
- Get agreements in writing: price, quantity, delivery date, quality standard and what happens if goods are late or faulty. For large or foreign deals, ask a licensed lawyer to review the contract. Course 2.14.3 (Complex Negotiation) covers change rules and review points in long deals.
- Example from Canada (see In your country in lesson 5): businesses may not make, import, sell or advertise a consumer product that poses an unreasonable danger to health or safety (see lesson 5).
- List your top three products and the supplier for each.
- For each supplier write unit cost, MOQ, lead time, payment terms and defect handling.
- Order a sample and check it against your product specification (size, material, colour, function).
- Find one backup supplier for your best seller and ask for the same details.
- Make a scorecard with four columns: on-time delivery, defects, price changes, response time.
- Put the key terms in writing and ask the supplier to confirm by email.
- Check: every top product has a primary and a backup supplier, and every supplier has written terms.
Read the video script
[Host] "One supplier is one point of failure."
[Screen: table with unit cost, MOQ, lead time, defects] "Write down cost, minimum order, lead time and how defects are handled."
[Text on screen: Sample first] "Always order a sample before a big order."
[Host] "Keep a scorecard, and line up a backup before you need one."
Build a supplier scorecard for your top three products and find a backup for the best seller.
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I'm learning "E-commerce Operations: fulfilment, systems and team" on The Future Market. Lesson 1: "Suppliers and supplier agreements". What the lesson teaches: - Before this course: Scaling an Online Shop (course 2.6.3), which came after Selling Online Courses and Digital Products (course 2.7) and Start an Online Store (course 2.6). You already know contribution margin, CAC, ROAS, email flows, LTV and the Canadian rules on ads and pricing. This course is about the work behind the order: suppliers, shipping, stock, returns, rules and people. - Key supplier terms: unit cost, minimum order quantity (MOQ), lead time (days from order to arrival), payment terms, quality standard, defect handling and who pays shipping. - Always order samples before a big order, and check them against your written product specification. - A supplier scorecard tracks on-time delivery, defect rate, price changes and how quickly they answer. Review it every quarter. - Do not depend on one supplier for your best-selling product. Qualify a second one before you need it. - Get agreements in writing: price, quantity, delivery date, quality standard and what happens if goods are late or faulty. For large or foreign deals, ask a licensed lawyer to review the contract. Course 2.14.3 (Complex Negotiation) covers change rules and review points in long deals. - Example from Canada (see In your country in lesson 5): businesses may not make, import, sell or advertise a consumer product that poses an unreasonable danger to health or safety (see lesson 5). The exercise I'm working on: Build a supplier scorecard for your top three products and find a backup for the best seller. I'm stuck. Please: 1. Explain the main idea in plain, simple words with one everyday example. 2. Walk me through the exercise one small step at a time. Ask me what I've done so far before giving the next step. 3. Don't just give me the final answer. Help me do it myself, and check my work when I share it.
I'm a parent helping my child (about 8 years old) with a lesson called "Suppliers and supplier agreements" from the course "E-commerce Operations: fulfilment, systems and team". Here's what the lesson says: If your lemonade stand buys lemons from one farm and the farm runs out, you have no lemonade. A good shop owner knows several farms, tests the lemons first and writes down what each farm promised. The activity: Build a supplier scorecard for your top three products and find a backup for the best seller. Please explain this so an 8-year-old understands: short sentences, a fun everyday example, and no hard words. Then give me 3 simple questions I can ask my child to check they understood, and a way to do the activity together, one tiny step at a time.
Sources
- Health Canada, Canada Consumer Product Safety Act overview: www.canada.ca/en/health-canada/services/consumer-product-safety/legisl
Fulfilment models and cost per order
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Inventory control
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Returns and customer service systems
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Product safety, importing and tax duties
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Building a small team
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Operations dashboard and a monthly review
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Final project
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Quiz
Why have a backup supplier?
One supplier is a single point of failure; late or faulty goods could stop your sales.
Name two fulfilment models.
For example self-fulfilment, a third-party logistics company, dropshipping or print on demand.
What goes into cost per order?
Packaging, labour or fulfilment fee, shipping you pay, payment fee and returns cost.
What is the reorder point formula?
Average daily sales x lead time in days + safety stock.
What is safety stock?
Extra stock held as a buffer against late supply or sudden demand.
After an online sale agreement, what do many consumer rules require you to give the buyer?
A written copy of the agreement; check how soon your rules require it.
What should you check right after a customer reports an injury from your product?
Your country's product-safety reporting rules and deadlines.
Name two factors tax agencies use to decide employee or self-employed.
For example control, tools, ability to hire helpers, financial risk or opportunity for profit.
What is an SOP?
A standard operating procedure: written steps so a task is done the same way every time.
Why pair every dashboard number with a decision?
So a missed target leads to a clear action, not just worry.
Final exam
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Certificate
This lesson is part of full access: every course and every level for one payment.