Selecting suppliers is undoubtedly one of the most challenging tasks organizations contend with. Between finding, evaluating and selecting suppliers that will meet existing needs with room to grow doesn’t have to be an arduous process. While requirements do vary greatly depending on industry, company size, demand, etc., the process of supplier selection can be simplified using a general road map that reduces much of the risks and cost.
So, how do you select the right suppliers?
Evaluate your needs– Where supplier selection and most other things are concerned, planning is key. Organizations need to carefully evaluate the internal and external factors that affect the kind of supplier they need. Not only is it a good idea for organizational strategy purposes, but potential suppliers will likely find this information useful for quoting purposes as well. I’ve found that feedback relating to poor choices in supplier selection is mainly attributed to poor communication. In other words, failure to meet expectations usually happens when expectations are not well defined and/or communicated to all.
Find potential suppliers using a concentrated checklist– Once you’ve figured out what you need, imagine the ideal supplier. In fact, brainstorm all of the characteristics that this perfect supplier would have. Then, take that list of wants and needs and concentrate it down to a handful of attributes. If you find it difficult to narrow down, see if any of the items can be characterized into a broader category and then assign weighted values. It’s a good idea to incorporate values regardless so analyzing the options becomes easier. Scouting often starts with online searches using marketplaces such as Alibaba.com. Follow-up interviews using the checklist as a guideline keeps everything in perspective.
Analyze the options– Go back and review the serious prospects. Pick a handful that outshines the rest based on the checklists. A grid analysis is an excellent tool for organizing information like this. It forces you to look at the bigger picture, yet it retains the ability to see each option separate or broken down by characteristic. At this point, a proactive approach we suggest is conducting supplier audits for the two or three choices that stand out as the best potential fit. “An on-site audit of the facility includes an evaluation of general operations, quality systems, qualifications and capabilities of the supplier as a viable source.” During an audit, checklist information can be verified on-site through various interviews and documentation review.
Make a decision— When selecting suppliers, make sure you maintain perspective regarding your requirements and weights of various attributes as noted during the information gathering process. It’s very easy to look at the bottom line and compromise on salient issues. Trust your information. And, be sure to follow-up with any potential prospects you didn’t select.
Develop a relationship– Developing a relationship with suppliers is critical to long-term success. It’s difficult to find a company that disagrees with this, but much easier to find one that truly dedicates the time and resources towards accomplishing it. Documented expectations and open communication reduce the headaches associated with poor quality, missed shipments or ultimately the process of switching suppliers. Regular follow-up is an invaluable and cost-effective way to identify potential issues early on.
Monitor performance– Ongoing evaluation of suppliers is necessary for continuous improvement. Gathering and analyzing performance data (inspection defect information, return rates, etc.) on a regular basis, in addition to intermittent on-site audits, identifies areas of improvement and insures expectations are being met. Where necessary, corrective action can be incorporated to resolve issues prior to customer impact and possibly even before they start.
Note that as a 3rd party quality assurance provider with resources in over 30 countries, Pro QC assists clients with Vendor Identification services that includes checklist development and scouting. In addition, Pro QC’s team of quality professionals offer expertise and local knowledge you can put to use on-site, providing unbiased assessments while reducing the time and cost associated with travel and evaluation. Product Inspections, Corrective Action and Supplier Development services also complement the supplier selection process as noted in this article.