One of the most important decisions a buyer makes is selecting the supplier. A good supplier helps you build a quality product and partners with you to satisfy your customers. Pick the right supplier and things seem to run more smoothly. Here’s a six-step process to help you pick the right supplier.
- The last time you bought a computer did you have any trouble deciding what brand to buy? It's not an easy decision. You want to make sure you're getting top value for your money. This decision is important to you. Well, purchasing agents have the same problems. Fortunately, they also have some pretty good methods for figuring out what brand to buy. One of the most important decisions a buyer makes is selecting the supplier. Pick the right supplier and everything runs smoothly. Pick the wrong supplier and you're company's entire business could be disrupted. That's why many purchasing departments keep a list of preferred suppliers. So, what's a preferred supplier? Well, they're firms with a strong track record of on-schedule deliveries of quality products. When given the choice, you will always do business with one of your preferred suppliers. It's really important to know how to select a supplier. Here's a six-step process to do that. First, you must recognize that you have a need. An actual request has arrived or you know that a request is coming. For example, a new product is about to enter production phase. Next, you should understand the requirements of the customer. What is needed in terms of costs, quality, and delivery? Then, you must determine the right strategy for buying this item. Will you source globally or is this something that needs to be purchased locally? Do you buy from a distributor or is it best to buy directly from the manufacturer? It's important to understand the needs of your internal customer and the needs of your organization and often you must balance the two. The next step to determine potential suppliers for this item. If this is a new product, you may not have a preferred supplier who can make this item. So, you look at those suppliers that are already certified by your company. If you still have too small of a supplier pool, you'll have to expand your search and possibly certify some new suppliers. Now that you have identified the potential suppliers, you send out a request for quote, or RFQ, which details the requirements of the contract, like production specifications and delivery schedules. Those suppliers interested in your business will send you their bid which, of course, includes the price they will charge for this item. Suppliers are often evaluated on the basis of production capability, which determines if they can meet your quality standards, and production capacity, which indicates if they can meet your expected delivery schedule. You also must consider financial stability. You don't want a supplier to go out of business in the middle of your contract. Technical ability of the engineering staff is also important. Important piece to consider is the skill level of the company's managers because if problems come up during the contract you may need the supplier's assistance. Lastly, you award the contract. So, it's easy to see that selecting the right supplier for each contract is very important to your success as a purchasing professional. A good supplier helps your company to build a quality product and partners with you to satisfy your end customer. These are the things to keep in mind when you're in a position to evaluate and select a supplier for your company.
- Explain the purchasing process.
- Define purchase order.
- Describe the intent of a purchasing policy.
- Distinguish types of purchasing structures.
- List the steps of selecting a supplier.
- Identify enablers for success in worldwide sourcing.
- Perform price and cost analysis.
- Measure supply management performance.