EDUCATION 101: Vendor Selection

VENDOR SELECTION

Vendor

Consideration of the right Vendor

While a definition of a good supplier which would be acceptable to everybody would be difficult to write, there are a number of attributes which might be regarded as desirable. The attributes of a good supplier would include a supplier who:

  • Delivers on time
  • Provides consistent quality
  • Gives a good price
  • Has a stable background
  • Provides a good service back up
  • Is responsible to the buyers needs
  • Keeps promises
  • Provides technical support
  • Keeps the buyer informed on promises

Buyers and sellers should always seek a mutually beneficial long term relationship through which advantages will arise for both participants in the trading process.

Vendor (Supplier) Appraisal

Supplier appraisal may arise when a prospective vendor applies to be placed on the buyers approved list or in the course of negotiation when the buyer wishes to assure him/herself that a supplier can meet the requirements reliably. What to appraise is related to the requirements of the particular purchases. All appraisals should evaluate potential suppliers from nine perspectives as follows;

  • Finance; seeks to establish the suppliers financial capability to meet buyers requirements
  • Production capacity; to establish supplier’s capability of a productive unit to produce stems within a stated time period.
  • Innovation and design; (where appropriate) to establish suppliers reputation for design and innovation, willingness to participate in collaborative projects and suppliers R&D and design staff. With regard to their qualifications and experience.
  • Production facilities; this would depend on the purpose of the facility of which the supplier should have full range of facilities needed for the job.
  • Human resources; no organization is better than the people who work for it. Qualifications and experience of suppliers staff, turn over, workers attitudes and so on should be ascertained.
  • Quality; has the supplier met the quality approval criteria such as ISO 9000, KEBS among others.
  • Performance; purchasers may establish suppliers likely performance through enquiring suppliers past and current customers.
  • Environmental and ethical factors; ISO 140001 provides guidelines on environmental policies and where applicable, suppliers should be expected to have an environmental policy and procedures for implementation of the policy.
  • Information Technology; More than a third of the buyers are currently using the internet to conduct transactions and such usage is likely to increase.

The appraisal may be done by means of a suitable questionnaire, supplemented where appropriate by a visit to the potential suppliers

 

Vendor Evaluation

Key Performance Indicators (KPIs) for the evaluation of suppliers are;

  • Quality and process control
  • Continuous improvement
  • Customer relationships
  • Lean manufacturing
  • Application of Just in Time
  • Quality
  • Price

Why Evaluate?

  • Evaluation can significantly improve supplier performance.
  • Evaluation assist decisions making regarding when a supplier is retained or removed from approved list
  • It assists in deciding with which suppliers a specific order should be placed.
  • Evaluation provides suppliers with an incentive for continuous improvement.
  • It can assist in decisions regarding how to distribute the spend among several suppliers.

Happy Wednesday!

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