Supplier Selection Process: Steps and Criteria

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Table of Contents

Procedure for Selecting a Supplier
Conclusion
Works Cited

Most scholars agree that there is no unique process for choosing and selecting vendors. For this reason, different companies may apply different criteria. However, the primary target should be to reduce purchasing risks and uphold maximum value to the firm.

Monczka et al. explains, “The intensity of the effort geared towards selection of a supplier is related to the importance of the product in question” (132).

Before you choose a vendor, it is important to get a list of various vendors who deal with the product that you want to source and evaluate their capabilities using the following selection process. In our case, we shall name our prospective suppliers as, “supplier A, B, C, and D”.

Procedure for Selecting a Supplier

Identifying the supplier, it is the most important aspect towards a successful selection of a reliable supplier. Before you select a vendor, it is important to consider the opinions of those involved in the business of the company and define the selection procedure. The fundamental aspect of selecting the right supplier is value. Choose a supplier who focuses beyond cost of supply to customer service, delivery commitments, and resource costs. Among various suppliers, it is important to purchase the product, not for itself but the speculated outcome, (Christopher 13).
Measure their supply performance; it is another significant aspect in finding a supplier on whom you can rely. Throughout the process of supply and manufacturer relationship, it is important to conduct an audit to assess various system quality and failures that could affect your ability to achieve while working with the chosen supplier. In case you have suppliers A, B, C and D, it is important also to consider the experience of each vendor.
Supply performance can also be measured by checking financial documents of the prospective supplier. It is important to choose a supplier who will not go out of business very soon because of lack of finance. If a supplier “A” has less financial stability, it is important to drop them since their financial instability may destabilize the cash flow of the company.
Responsiveness to order requirements, the value of your project matters most when choosing a supplier. Before choosing who to work with, find out how they value your project. There are vendors who focus on prints other that the value of your project. Among suppliers B, C, and D. find out who understands and addresses the individual needs of your project. By use of a vendor survey form, suppliers are interviewed to get information about quality of the material, size of the facility, and the number of employees.

It is also important to determine whether the prospective supplier conforms to national quality assurance standards. Choose the supplier who has never lost a client due to poor performance. Drop “B” if they are not able to respond quickly to sudden changes in order and delivery requirements.

Supply schedule, this aspect of selection involves what your plan is and determining your deadlines. Find out how information can easily be accessible by both “C” and “D” and equally how their information gets to their clients. Can purchase order procedures be captured by telephone, call center or internet? Does order detail include fulfillment integration that includes packaging and delivery? (Leeman 90). If supplier “C” has less staff and does not quickly access information from a client, it is justifiable to drop and avoid them. Information accessibility will affect timely changes in case a need arises, and the client needs to change the schedule to suit the request of a customer.

Terms of business, it involves terms of payment, delivery, packaging, and assembly. It is an important aspect of supplier selection that discusses whether they transport their products to the company and details of payment arrangements. Understanding terms of business is important because they affect the company cash flow and, for this reason, is important while choosing a potential supplier, (Moser 24-26). Choose a supplier who is flexible and can adhere to changes in terms of credit and demand.

Conclusion

Successful selection of a vendor is crucial for every firm. A supplier is reliable if their competitiveness fits the requirements of your company to ensure a quality relationship. It is always important to procure from a company that manufactures and supplies products to your firms.

Supplier “D” values the customers’ demands and can change with changes in client schedule. It is important to buy from supplier “D” due to their records such as; performance and ability to communicate in case of changes availability of packaging and delivering options to the client. Find out how the senior management of company “D” participates in new customer relationship. Purchasing from companies whose top management participates in new customer setup is crucial since communication will be effective.

Works Cited

Christopher, Martin. Logistics and Supply Chain Management, Burr Ridge: Financial Times/Irwin Professional Pub, 1994. Print.

Hatten, Timothy S. Small Business Management: Entrepreneurship and Beyond. Mason: South-Western Cengage Learning, 2012. Print.

Leeman, Joris. Supply Chain Management: Fast, Flexible Supply Chains in Manufacturing and Retailing. Düsseldorf: Institute for Business Process Management, 2010. Print.

Monczka, Robert M, Robert J. Trent, and Robert B. Handfield; Purchasing and Supply Chain Management. Cincinnati: South-Western College Pub, 2002. Print.

Moser, Roger. Strategic Purchasing and Supply Management: A Strategy-Based Selection of Suppliers, Wiesbaden: Dt. Univ.-Verl, 2006. Print.

Rushton, Alan, and Steve Walker; International Logistics and Supply Chain Outsourcing: From Local to Global. London: Kogan Page, 2007. Print

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Supplier Selection Process: Steps and Criteria

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