To select the correct supplier is the essential element of purchasing. Nothing will define your future business more than the supplier you have chosen. If the purchasing function has made the right decision they will hear nothing from the other departments as the supply chain is working, the end products are fine and the end customers are happy. As soon as something goes wrong there is one function to blame, right or wrong, purchasing will be there to act.
Thus how do you select the right supplier so that it is obvious to everyone why this supplier has been chosen and no one else. At first it is important that purchasing includes other functions in the selection process as purchasing won’t be the only one who needs to interact with the supplier.
Engineering, manufacturing, marketing, finance and other functions should be contacted to understand what they are looking for by a supplier. Purchasing & engineering need to be very close and it is engineering who will define the requirements of the product and with that a big part of the items which the supplier has to fulfil. Then purchasing needs to work on all the other elements and to define an assessment matrix to categorize the different suppliers.
This can include but is not limited to:
- Technical Abilities
- Delivery Performance
- Financial Stability
- Commercial Judgement
- Project Objectives – Timing
- Feedback from other functions
- Other Business Goals
The final decision needs to be objective as possible and therefore you need more than your own input. It is also important to understand that you might be at different stages when choosing a supplier, e.g. you have already a supplier panel and you take this as basis or you have no one for the specific category and you start from scratch.
No matter what you do don’t drive the decision on your own because then you will be the only one responsible for good and more for bad. It will be hard to find the respective support once you require it.
What kind of tool do you use to come to a decision?
Klaus Weghaus is an experienced professional who has gained knowledge in international project management and purchasing. He served more than nine years within a big OEM of the automotive industry having various positions within Product Development and Purchasing. Klaus oversees the creative direction at Rhenus Consulting as well as business development. As a marathon runner he will ensure that he does a marathon for you if this is required.