Key considerations for vendor selection
Key considerations for vendor selection
You are a supermarket storeowner and you are looking for the supply of products to sell in your store.
You are running a website development company and you want a supply of laptops for your employees.
You own a manufacturing facility and you are looking for a supply of stainless steel to make your machines.
All these and many other processes require you to obtain the supply from the selected vendor. However, vendor selection is not an easy process. Selecting the right vendor requires you to follow a defined process and prepare a checklist to compare multiple vendors on different parameters. If you do not make the right selection, your business may suffer in terms of money, time, or bad quality products.
Supplier selection is a critical process, as the supplier’s products will be leading you to complete the production of your goods or help you deliver your services. Though it is a stressful and time-consuming activity, it requires your strategic thinking and rational mind-set to select the right vendor for your business. Specifically, you must try to select a supplier that delivers you the products or raw materials not just for current use, but with whom you can have a long-term contract.
Supplier selection criteria
With this background, we intend to help you with the key vendor selection criteria so that you make the right decision in the vendor selection process:
You must ask the vendors for proof regarding their ability in their area of expertise such as previous work. For this, you can look at their quality certifications, skills and experience of key people involved, and learning and development frameworks existing in the firm. This criterion checks the knowledge and ability of the vendor to provide you the appropriate quality products according to your need and that satisfy your quality expectations. The delivery of your desired products within the scope and before the deadline ends is your key concern and the vendors must prove their capacity to address this concern of yours.
A business generally tries to find a vendor for a long-term relationship. Therefore, the consistency of the vendor in providing quality products all the time along with the best customer services is of significance. You must check the vendor’s commitment to high levels of quality. For this, you can look for a vendor that has a quality control team in place or a dedicated project manager for handling your account.
You can deal with the lowest-priced vendor only when you have multiple vendors to select from. Understand the costing item-by-item to look for any hidden charges that may crop up after the purchase. It is also necessary for you to give an accurate picture of your expectations regarding the quality and timelines. Based on your expectations, the vendor will submit their bids.
It is your responsibility to ask for every small expense that they may include in the future such as administrative expenses, delivery charges, and many more. Furthermore, ensure to check the product quality of the vendors who submit far lower prices than most of the other vendors; such cases raise doubts on the quality of the product.
Though an ignored factor, it is important since you two will be business partners, and if you have a different outlook, it affects the working relationship. Therefore, prior to contracting with a potential business partner, you must understand their working philosophy and work culture for better fitting with your working style. You must have a guarantee of their integrity, high ethical standards, involvement in any legal cases, and a commitment to society.
References and recommendations
You must consider this parameter if the vendors fare at the same level on most other parameters. For this, you can consider the word-of-mouth publicity of the vendor, ask the members of local and national professional organizations of which you are a member, LinkedIn connections, business friends, and other professional or personal networking groups.
You can ask your networks and connections regarding the professionalism, timeliness, product quality, and customer services of the respective vendor. If most of them are good reviews, probably you are good to go; however, if most of them are negative reviews, you can save yourself from a possible destructive relationship. Another way is to ask the vendor for few references; you can check them further for honest reviews.
Understand that vendor selection, vendor screening, vendor evaluation, and vendor recruitment are important phases of obtaining high-quality products or raw materials for direct or indirect use in your business. You have to do your homework sincerely and with a commitment to onboard the right vendor for your business. Therefore, use the criteria mentioned above to screen your potential suppliers for achieving a better vendor experience and avoiding bad experiences related to over-pricing, bad quality products, or sour relationships.
We, the people at Technovisors, have the expertise and experience in the vendor screening and vendor evaluation processes. We can help you with the supplier selection process to take your business ahead on the path of growth. We have industry-specific frameworks in place for vendor evaluation to assess them on commercial, technical, and past experience factors to make evidence-based decisions for you. We understand your requirements, develop the parameters along with your in-house team, identify several vendors suitable for your business needs, and help you with the selection of the right one.
About the Author
(CISA, FCA, CS, DISA (ICAI), FAFP (ICAI))
Pathik is a multi-disciplinary professional with more than 22 years of experience in compliance, risk management, accounting, system audits, IT consultancy, and digital marketing. He has extensive knowledge of Anti-Money Laundering rules and regulations, and he helps companies comply with legal requirements. Pathik also helps companies generate value from their IT investments.