Selecting the right supplier for a specific purchase is a vital job for the procurement group. But many departments in your organization will be interested in which providers you eventually choose. By way of instance, the user of this service or product, budget holder, the quality department and fund. Each will have a different perspective on what makes a provider a good one. Some of those views will be capable of being measured whilst others will be more subjective in character. Procurement’s task is to channel these various perspectives into a coherent and consistent method that produces the best supplier base to satisfy your organization’s objectives.
Here’s a two step procedure for achieving this.
Step one is a preliminary evaluation. You can accomplish this with a combination of desk research and a mail shot to providers asking for information. The information you need to collect about each provider includes the following:
- Their product range
- Their production capacity both in total and their current utilization
- Any quality standards they have attained
- Their financial performance
- Their credit score awarded by independent agencies like Dun and Bradstreet
- Any client testimonials they can provide
Using this information you can eliminate from the consideration those providers who do not meet your standards. Step two is the follow-up evaluation. Now that you have a smaller list of possible providers, the next step is to investigate them in more detail. This is often achieved by visiting their premises and carrying out an audit of the actions. It is best done as a team effort with your coworkers who can provide specific expertise for example an accountant to look at and question key financial ratios.
The audit must cover their:-
- Financial stability
- Ability to do the job
- Ability to do the job
- Understanding of your needs
Moreover, you need to form a View of these in terms of what they want to deal with as individuals. This is important as many issues and opportunities are based on how they work together with you as a team.
This means that providers are Free to pick the materials they use and the procurement process or Delivery process if it is a service that you are buying. Giving this freedom to suppliers should lead to lower costs which may be passed on to you as a lower price.