Supplier Selection practices

1. SUPPLIER
SELECTION
PRACTICES
I I N V E N T O R Y S Y S T E M

2. Choosing the right supplier involves much more than scanning a
series of price lists. Your choice will depend on a wide range of
factors such as value for money, quality, reliability and service.
INTRODUCTION:
ISABEL MERCADO
A strategic approach to choosing suppliers can also help you to
understand how your own potential customers weigh up their
purchasing decisions.

3. This guide illustrates a step-by-step approach you can follow that should help you
make the right choices.
STEP-BY-STEP APPROACH
• Thinking strategically when selecting suppliers
• What you should look for in a supplier
• Identifying potential suppliers
• Drawing up a shortlist of suppliers
• Choosing a supplier
• Getting the right supplier for your business

4. The most effective suppliers are those who offer
products or services that match - or exceed - the
needs of your business. So when you are looking for
suppliers, it's best to be sure of your business needs
and what you want to achieve by buying, rather
than simply paying for what suppliers want to sell
you.
THINKING STRATEGICALLY WHEN SELECTING
SUPPLIERS

5. Buying from a carefully targeted group could have a number
of benefits:
• it will be easier to control your suppliers
• your business will become more important to them
• you may be able to make deals that give you an extra
competitive advantage
However, it's important to have a choice of
sources. Buying from only one supplier can be
dangerous. While exclusivity may spur some
suppliers to offer you a better service, others may
simply become complacent and drop their
standards.

6. Reliability
• Remember - if they let you down,
you may let your customer down.
WHAT YOU SHOULD LOOK FOR IN A SUPPLIER
Quality
Value for your Money
• The quality of your supplies needs to
be consistent - your customers
associate poor quality with you, not
your suppliers
• The lowest price is not always the best value for money. You'll have to
decide how much you're willing to pay for your supplies and the
balance you want to strike between cost, reliability, quality and service.

7. Financial security
• It's always worth making sure
your supplier has sufficiently
strong cash flow to deliver
what you want, when you
need it.
WHAT YOU SHOULD LOOK FOR IN A SUPPLIER
A partnership approach
Strong service and clear communication
• The best suppliers will want to talk with you
regularly to find out what needs you have and
how they can serve you better.
• A strong relationship will
benefit both sides.

8. It's best to build up a shortlist of possible suppliers through a
combination of sources to give you a broader base to choose from.
IDENTIFYING POTENTIAL SUPPLIERS
Recommendations
Directories
Trade Associations
Business Advisors
Exhibitions
Trade Press

9. When considering the firms on your shortlist, ask yourself the
following questions:
DRAWING UP A SHORTLIST OF
SUPPLIERS
• Can these suppliers deliver what you want,
when you want it?
• Are they financially secure?
• How long have they been established?
• Do you know anyone who has used and
can recommend them?
• Are they on any approved supplier lists
from trade associations or government?

10. CHOOSING A SUPPLIER
• GET A QUOTATION
• COMPARE POTENTIAL
SUPPLIERS
• NEGOTIATE TERMS AND
CONDITIONS

11. GETTING THE RIGHT SUPPLIER FOR YOUR BUSINESS
• Know your needs
• Spend time on Research
• Ask around
• Credit check potential suppliers
• Price Isn't everything
• Agree on service levels before you start
• Don't buy from too many suppliers...
• ...but don't have just a single supplier