Supplier Selection

Supplier Selection

1. The Supplier Selection Decision

   • Decision Trees
     • To use decision trees effectively, the supply professional must identify the options and the criteria for evaluation and assess the probabilities of success and failure.
     • It is necessary to consider the selection decision as part of a chain of events, rather than as an isolated instance.
     • This addition of a time frame—past, present, and future—makes the sourcing decision even more complex.

2. Identifying Potential Sources

   • There are three potential supply options for any new need/requirement of an organization.
     • Make option or doing it in-house
     • Acquire the new need from a current supplier of other requirements.
     • Engage in a search for potential suppliers
   • Information Sources
     • Online
     • Catalogs
     • Trade Journals
     • Trade Directories
     • Sales Representation
     • Supplier and Commodity Databases
     • Visits to Suppliers
     • Samples
     • Colleagues
     • References
   • Standard Information Requests
     • The Request for Information (RFI)
     • The Request for Quotation (RFQ) or Request for Bid (RFB) or Invitation to Bid or Tender
     • The Request for Proposal (RFP)

3. Additional Supplier Selection Decisions

   • Single vs Multiple Sourcing
   • Manufacturer vs Distributor
   • Geographical Location of Sources
   • Supplier Size

4. Supplier Development/Reverse Marketing

   • It defines the need for developing new or existing suppliers

5. Evaluating Potential Sources

   • Level 1—Strategic
     • Linking Sourcing with Strategy
     • Risk Assessment
     • Loss Exposure.
     • Strategy Development
   • Level 2—Traditional
     • Technical, Engineering, Manufacturing, and Logistics Strengths
     • Management and Financial Evaluation
   • Level 3—Current Additional
     • Financial Considerations
     • Environmental Impact
     • Innovation
     • Regulatory Compliance
     • Social.
     • Political.

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