Supplier selection – is it an art or a science?

Identifying suppliers that consistently meet our Quality, Cost and Delivery expectations can be a real challenge. Is there a simple formula for supplier selection, or is it okay to rely on our intuition and gut feel?

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Here are my top 5 tips for supplier selection, but what do you think is important to consider when selecting a new supplier?

1. Assess potential risks when selecting strategically important suppliers.

–  Could their geographic location pose a potential risk or impact lead times?

–  Do they have the ability to meet both our current and future capacity demands?

–  How reliable is their logistics / delivery capability?

–  What do we think of their financial stability in the long term

– What is the alternative supply option should they fail to meet commitments?

2. Commercial considerations go beyond the lowest price.

– Is their price competitive?

– Are they  co-operative, flexible and keen to work with us?

– Do they have polices and procedures covering CSR, Quality, Safety, Environmental

3. Understand their resources and capabilities

– What are their Management capabilities and do they have a succession plan?

– What are their Design, technological and Machinery / Equipment capabilities?

– What is their annual investment in R&D and Training?

4. Supplier performance

Quality, Cost and Delivery are recognised as Key Performance Indicators – but can the supplier demonstrate past performance with thier existing customers?

5. Continuous Improvement

As well as driving day to day performance, effective supplier development strategies include a programme of continuous improvement where the rate or degree of improvement can be measured, for example:

– Order cycle time reduction from order placement to receipt of goods

– Reduction in parts per million defects

– Improved on time delivery

– Price reduction

– Reduction in new product development time from concept to volume production

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