Getting Your Product Out the Door: Sourcing and Vendor Relations

Insights into finding, evaluating and working with vendors

This is the fifth of six serialized sections of Getting Your Product out the Door: Product Development Basics. This section, “Sourcing and Vendor Relations,” provides tips, tools and best practices on finding, evaluating and developing positive relationships with suppliers.


Most of us understand that building a product from the ground up requires more than a great idea. And whether you’re starting your own business or creating a new product for a big company, everything from the logo to the light bulbs needs to be in place for you to succeed.

But how do you find suppliers that are right for you? How do you protect your company during negotiations?  And how to you keep your supplier relationships strong and healthy over time? 

The challenges inherent in vendor selection only increase when the vendor in question will be responsible in part for your product itself. It’s also much more difficult to find the right outside resource when you’re unsure how to evaluate the quality of the work. Yet, the direct impact of suppliers, from freelance writers to software developers, on our product development will only continue to grow. The stakes have never been higher.

Getting Your Product out the Door: Sourcing and Vendor Relations is the fifth article in a six-part series compiled by product owners with decades of experience in creating and launching successful subscription products.  The series is full of specific tips, checklists, examples and tools as well as best practices and foundational knowledge that will help you select the suppliers that are the right fit for your business.

This series is written with the beginner in mind.  The content is explanatory and foundational, designed to give someone new to product leadership the practical tools necessary to build a product in a timely and efficient manner.  

Getting Your Product out the Door: Product Development Basics

Part 5: Sourcing and Vendor Relations Suppliers and Subscription Businesses: How the Relationship Has Changed

 width=As we discussed in the first article of this series, “Getting Your Product out the Door: What is Product Development,” publications are no longer primarily, or sometimes even secondarily, paper-based products. And while subscription-box businesses and other forms of recurring retail may deliver hard goods to their customers, those customers most often interact with the business via software applications.

Yet, while there have been supplier sourcing activities in publishing and all subscription businesses since the printing press was invented, supply-chain decisions in times past were largely handled by the production shop.  The role of product owner didn’t exist. But as technology increasingly defined not just the delivery mechanism of the product but became the product itself, and freelancers became the rule rather than the exception in content creation, the need for a new breed of sourcing grew.

Happily, the practice of supplier sourcing has evolved with these changes, and today there are many helpful tips and tools to guide you in the process of finding the right vendors for your business.

Types of Suppliers: Some Key Definitions

While the line between “direct” and “indirect” suppliers – in terms of their evaluation, onboarding, and management – have increasingly blurred over the past few decades, there are terms and types of supplier relationships that it’s important to be aware of.  The following chart lays out a few of the key definitions, and what they mean to you:

Type of Supplier



What You Should Know

Direct Suppliers that deliver items that become a part of your product. Authors (articles), product suppliers (for subscription-box businesses), software engineers (online games or other customer-facing apps). Be sure to include anyone building customer-facing software or apps in this definition, and treat them as you would any supplier of goods that your customer will interact with.
Indirect Suppliers that deliver items that that are not directly part of your product. Content writers (marketing), office supplies, software engineers (accounting systems). Don’t overlook these relationships – what would happen to your business if you lost your accounts receivable data?
Consultant Strictly speaking, synonymous with a contractor, although generally expected to provide advice and insight. Efficiency expert, competitive analysis, strategic planning. Do not pay 100% of fee upfront; set up incremental deliverable milestones.
Contractor or Freelancer Strictly speaking, synonymous with a consultant, although generally expected to provide specialized work for hire. Freelance writer, software engineer, web designer. If this individual is on site at your facility and using your resources (PC, etc) they may be considered an employee in the eyes of the IRS – get advice from an accountant to be sure.
Contract Hire An individual who you employ 1:1 through a staffing service. Frequently a skilled hire such as an IT professional. Firms such as TekSystems. You pay the service provider, not the individual – be careful not to miscategorize these workers as contractors/consultants.
Temporary Employee Similar to a contract hire, although the term generally refers to a short-term, lower-skill hire. Firms such as Kelly Services. Great to leverage such services for periodic needs (such as box packing) during peak times.
Outsourced Service Turning over fulfillment of an operational unit or project to another company; often, in publishing, it is to a technical services firm to build software or apps. Firms such as MongoDB. When hiring an outsourcing firm, ask to meet with the person who will be your ongoing interface. Is this person qualified, and a good fit with you and your team?
Offshoring Outsourced services located outside of your own country’s borders. Technical services in India or Israel; call centers in Ireland or Canada. Balance cost with customer satisfaction when choosing an offshore firm.

Understanding the terminology of vendor relationships is a good first step in effective sourcing, and leads logically to a discussion of the written agreements used in hiring suppliers.

“Work as hard on building a good supplier relationship as you do building a good relationship with your customers.”


The Documents of Supplier Relationships

 width=You should expect to create – and negotiate – binding agreements with vendors that protect both them and you.  There are also special tax forms needed when dealing with contractors and freelancers. While the following list is neither exhaustive nor is every document necessary in every supplier relationship, these are common agreements you should be aware of and use when necessary:

Non-Disclosure Agreement (NDA)

 width=What Is It?   

  • A non-disclosure agreement (also known as a confidentiality or confidential disclosure agreement) is a legal contract between you and your prospective supplier that precludes each party from using product, strategy, marketing, pricing or other proprietary information to compete against each other. (1)Rocketlawyer or LegalZoom or even free NDA copy from a site such as NOLO to save time and costs. 

Service Level Agreement (SLA)

What Is It?

  • A service level agreement (SLA) is a contract between a service provider (either internal or external) and the end user that defines the level of service expected from the service provider. SLAs are output-based, meaning their purpose is to define what the customer will receive. (2)

What You Need to Know:


Request for Proposal (RFP)

What Is It?

  • Unlike the prior two documents, an RFP is not a legal document, but rather a communication that your company has the need for products or services from a supplier, and is seeking competitive bids for the business.  The RFP is not only a document but an evaluating process, which will be discussed in more detail later in this article.

Form 1099

 width=What Is It?

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