Your specifications document is written, you can now distribute it and start identifying potential partners. Do you know the 3 priority points you need to keep in mind to properly identify and select your suppliers?
Study the market
A thorough understanding of the market is fundamental for a buyer. Various sources can be used to gather information: the internet, professional networks (colleagues, experts, trade federations, CNA, etc.), economic information databases, trade shows or congresses, etc. It is also possible to add elements of an RFI (Request For Information, or “Consultation without obligation”) to one’s “survey”.
Porter’s Five Forces model is a very useful tool for structuring and summarizing market research on a purchasing category. Below is an example:
The concept of a market’s maturity cycle is one that must be kept in mind: suppliers will not have the same profile or characteristics in a market that is in the launch, growth, maturity, or decline phase.
A market is structured according to competitive forces. As a buyer, you must be aware of these forces to properly position your request for proposals and your search for suppliers before committing to a long-term relationship. Therefore, you must identify potential new entrants and potential substitute products (existing or emerging in the near future), and you must understand the regulatory constraints to which your purchases and products will be subject.
Use pre-selection and selection criteria
Managing the selection of a supplier is a lengthy process that can involve multiple steps. To achieve a successful outcome, this process should result in a gradual reduction of the number of vendors on your list. Depending on the nature of the goods or products to be purchased, their complexity, their strategic importance, and the amount of expenditure involved, this process can sometimes take many months.
As the selection process narrows, you need to define pre-selection criteria. These criteria may apply to different areas of the business, and you, as the buyer, must define the importance of each criterion and your specific needs within that area. This will result in a table that you can fill out to evaluate all the companies identified in your sourcing, before deciding which ones to consult for the tender. This will naturally prevent you from consulting companies that, at the last minute, might turn out to be “outside the criteria” when making your final selection.
Example of a pre-selection table:
At the end of the tendering process, when only a few suppliers remain who have passed all the pre-selection stages, the final selection will be made based on specific and differentiating criteria. It is strongly recommended to establish these criteria before launching the tender to avoid any risk of revisions during the project.
Systematize best practices
• Always listen to and respond to suppliers;
• State the reasons for selection or non-selection (respect the supplier’s effort);
• Stick to the schedule. In case of deviations, inform and explain;
• Develop the evaluation grid with internal clients;
• Regularly inform internal clients and management about the progress of the tender;
• Whenever possible, visit the supplier’s site, especially those with the best potential;
• Maintain confidentiality