Section 03 Supplier Selection
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Understand the various criteria to be considered while selecting suppliers or vendors and the the different methods to evaluate and compare suppliers
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Section 03 Supplier Selection
- 1. supplier selection 01 market conditions different conditions, supplier lists and reasons to scout 03 supplier evaluation different techniques to qualify and evaluate suppliers 02 supply chain conditions conditions of supply chain based on different criteria 04 supplier selection criteria to be considered while selecting suppliers
- 2. market conditions sole source concerned supplier is the ‘one and only source’ for the product single source concerned supplier is not the only source but your preferred source oligopoly interdependent or highly competitive market with similar pricing
- 3. supplier listing qualified suppliers central repository of suppliers qualified based on certain criteria supplier details basic details of products, services, capabilities and infrastructure ratings remarks and ratings based on experience from previous association
- 4. reasons to scout suppliers new item goods or service that have not been procured previously price better prices from suppliers with higher efficiency owing to scale bad experience poor delivery or default from any existing supplier increased requirement additional quantity is beyond the capacity of current suppliers lead time shorter lead time with location or quicker process of supplier explore options explore or keep options ready in case of switch required
- 6. based on location local within the city, region or same local legislation domestic within the same country but different region or legislation international overseas or cross border supplier from different country
- 7. based on layers direct straight from producer with no intermediate agent shallow from seller with an intermediate agent or dealer extensive through last mile provider procuring through several layers
- 8. impact on logistics transport mode medium of transport such as sea, air, road or rail statutory compliances and paper to be submitted to legislative authorities cost cumulative cost of procurement with direct and indirect costs lead time cumulative lead time subject to transport and compliances taxation applicable taxes and input credit structure based on legislations supply risk disruption or interruption chances from uncertain events like weather
- 9. impact of product nature patented law access restricted know how restricted source restricted general available
- 10. impact of product nature patented original equipment manufacturer restricted access regulatory authority restricted know how authorized Service provider restricted source mining or refinery generally available appointed dealer distributor
- 11. oil & gas note upstream onshore and offshore oil rigs from where raw crude oil is extracted mid-stream transport and intermediate storage of crude oil for processing downstream refining to products like fuel, lubricants, wax and chemicals
- 13. supplier screening establish grade filter out and prevent suppliers below a certain grade pre-qualification criteria qualify suppliers beforehand to participate in the bidding minimum baseline establish a status quo of suppliers at certain fronts non-critical items can be used as standalone tool for non-critical items
- 14. supplier scoring set total marks filter out and prevent suppliers below a certain grade marks for each factor divide the total marks by the number of factors set factors for instance, revenue, previous experience, quality certifications, after sales, brand value, location, lead time, warranty.. rate and sum rate supplier on each parameter and sum up the score
- 15. weighted scoring set total marks filter out and prevent suppliers below a certain grade marks for each factor divide the total marks by the number of factors set factors for instance, revenue, previous experience, quality certifications, after sales, brand value, location, lead time, warranty.. rate rate supplier on each parameter independently factor weightage assign weightage to each factor based on the context and item sum product multiply scores with respective weightage and then sum up
- 16. normal vs weighed scoring Max Marks Score Average Scoring Weightage Factor Weighted Scoring Cost 20 20 20 5% 5 Lead Time 20 15 15 20% 15 Warranty 20 15 15 30% 22.5 Quality 20 15 15 40% 30 Service 20 15 15 5% 3.75 Total 100 80 80 100% 76.25
- 17. summary of techniques screening preliminary screen to filter out suppliers based on certain qualification criteria scoring assigning score to suppliers based on various parameters weighted scoring laying emphasis on more important parameters in scoring
- 18. selection criterion comprehensive list of factors factors ranging from technical to financial to be considered important and complex contracts small procurements may not necessitate use of all factors use only most appropriate factors based on item and context one should consider certain factors
- 19. selection criterion 01 business size revenue • Revenue • Production 02 business type divisions • Primary product • Secondary product • By-product • New product • Experimental product
- 20. selection criterion 03 financial capacity funds management • Revenue • Average order value • Highest single order value 04 past-experience preparedness • Learning curve • Available formats • SOPs (Standard Operating Procedures)
- 21. selection criterion 05 past client references recommendations • Recommendations • Repeat orders • Duration of association 06 rights and license intellectual property • Transfer of rights • Ownership of IP • Use license of IP • Limited use license of IP
- 22. selection criterion 07 technical competence preparedness • Equipment • Talent • Processes (Standard Operating Procedures) 08 capacity value • Nature of product • Value (rate) of inventory • Average Ticket Value
- 23. selection criterion 09 warranty performance • Inclusions • Period • Logistics • Corporate warranty or performance bond 10 after sales service & support • Service network • Extent of support • Quality of support • Inclusions
- 24. selection criterion 11 management approach • QMS (Quality Management System) • ERM (Enterprise Risk Management) • Industry certifications • Certifying authority or agency 12 lifecycle cost • Low upfront cost – higher recurring cost • High upfront cost – lower recurring cost
- 25. new courses business essentials all fundamentals that you need to know about business along with an interesting section on evolution of business. product costing and pricing calculating product cost with fundamental understanding of business and various pricing strategies! plan your business introductory course about the business landscape and method to fill up the business canvas.