Need new suppliers for a new company product? Not satisfied with a supplier performance and intend to change? Or want to test your existing suppliers? This is how you can evaluate existing and new suppliers according to your business needs.
Any company’s success largely depends on suppliers. What are the criteria's you use to figure out the best supplier? If you are still not sure we are here to help you out,
Based on the product and services you need to procure, the criteria for supplier selection changes. If you are looking for certain product with the exact technical specification, major considerations can be price rather than innovation as specs are already defined. While in some cases price may be less important adding only 15% weighting, but the innovation required in this case might be 85%.
Your supplier selection also depends largely on your company goals. Whether your company wants to be a market leader in innovation, improve customer satisfaction or improve profitability. This is particularly vital in selecting the right supplier.
It's not always the price that should be given the importance. One always needs to weigh price and quality against each other. The payment terms are significant because they bring with them a price advantage or disadvantage. For a payment term of 60 days credit, you can use the money elsewhere, while for advance payment this won't be possible.
The transparency of the offer provided is also noteworthy. The offer made by supplier to the buyer must be clear and easily understandable. There should not be any hidden cost attached with the offer.
When it comes to delivery it is an indispensable factor in supplier selection. As a shut down due to missing part can lead to fatal consequences for company’s reputation. It must be ensured that the goods are delivered not only on time, but also with regular consistency of required quantity.
What additional services are included? Do they offer apt training courses or tutorials along with installation? Is the support team easily reachable? These factors should also be taken while doing a supplier selection.
High-quality goods cannot be created without quality parts. Supplier evaluation largely depends on error rate of product delivered which is measured using the unit parts per million (ppm). Supplier selection is inversely related to error rate. For example, if the supplier error rate in automotive industry decreases than 20 ppm the chances of supplier selection increases, while if error rate increases beyond 20 ppm the chances of supplier selection are less.
While evaluation of a supplier you can also ensure that the supplier has appropriate certifications for quality management. For example, is the organization ISO 9001 certified meeting customers’ expectations and delivering requirements.
Make the right supplier choice is always a subjective decision, but with the right eSourcing tools and strategies, it can be simplified. eSupplierGlobal.com helps you discover the right supplier which not only fit in with your business goals and strategies.