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Supplier Selection

Training for Selecting the Right Supplier

by Scott Mathusek

What will be covered

Supplier Selection Defined Brainstorming Exercise Supplier Evaluation and Selection Process Real World Example Practice Exercise

Supplier Selection Defined

• Supplier: “External entity that supplies relatively

common, off the shelf, or standard goods or

services” (Business Dictionary)

• Supplier Selection: “The stage in the buying

process when the intending buyer chooses the preferred supplier or suppliers from those

qualified as suitable.” (Westburn Dictionary)

Brainstorming Exercise

Why is supplier selection so important to your organization?

What can result in your company from having the incorrect supplier?

What is important to you when finding a supplier?

Evaluation and Selection Process

  • 1. Recognize the need for supplier selection

  • 2. Identify key sourcing requirements

  • 3. Determine sourcing strategy

  • 4. Identify potential supply sources

Evaluation and Selection Process

  • 5. Limit suppliers

  • 6. Determine method of supplier evaluation and selection

  • 7. Negotiate and select supplier

Recognize Need for Supplier Selection

Why are you looking for a supplier?

End of contract Problems with current supplier Have new product

Identify Key Sourcing Requirements

What do you require from your suppliers? Are your requirements in alignment with company goals and mission?

• Consider Carter’s 10 C’s of Supplier

Selection

Carter’s 10 C’s of Supplier Selection

Competency Capacity Consistency Control of Process Cost/Price

Commitment to quality Cash/finances Clean Culture and relationships Communication

Determine Sourcing Strategy

How many suppliers are you going to need?

Single Source Multiple Source

Identify Potential Supply Sources

Where can you find your suppliers? Simple brainstorming activity will generate a long list of possibilities

Limit Suppliers in Pool

Narrow down your choices

100%
100%

A

75% 25%
75%
25%

B

33% 36% 31%
33%
36%
31%

C

40% 22%
40%
22%
18% D
18%
D
43%
43%
57% E
57%
E

Determine Method of Supplier

Evaluation and Selection

Choose what you would like to evaluate Decide where you will gather your information from Make selection from your evaluations

Negotiate and Select Supplier

Perform negotiations with supplier Choose supplier and agree to terms

MFG.com

Moves to India to better position themselves as a buyer

Looks to specifically increase competency, commitment to quality, and capacity and lower cost/price

Practical Exercise

You and three others have narrowed the search down to four companies

Using Carter’s 10 C’s you have chosen four factors

you will use to evaluate and have also assigned each

factor a weighted percentage

Perform a weighted factor analysis to decide which company to is the best option

Column1

Danny

Ryan

Jane

Helen

Mode Average

Competency

40%

30%

25%

30%

30%

31%

Capacity

30%

30%

25%

20%

30%

26%

Consistency

20%

20%

25%

30%

20%

24%

Control of

Process

10%

20%

25%

20%

20%

19%

 
 

A

B

C

D

Competency

77

90

76

85

Capacity

85

85

85

90

Consistency

95

86

95

87

Control of Process

90

95

90

90

 

MODE

A

B

C

D

 

Competency

23.1

27

22.8 25.5

Capacity

25.5 25.5 25.5

27

Consistency

19

17.2

19

17.4

Control of Process 18

19

18

18

Total

85.6

88.7

85.3 87.9

 
 

AVERAGE

A

B

C

D

 

Competency

24.1

28.1 23.8

26.6

 

Capacity

22.3

22.3 22.3

23.6

 

Consistency

22.6

20.4 22.6

20.7

Control of Process 16.9

17.8 16.9

16.9

 

Total

85.8

88.7

85.5

87.7

Summary

The evaluation and selection process is much based off of company goals, missions,

and preferences

• Use Carter’s 10 C’s to have a more

encompassing evaluation

Readings list

All information used for this presentation is based from information from the following sources:

Fuller, Neil. “How Many C’s in Partner?” All Business. Supply Management, 8 Sept. 2005. Web. 5 April

2010.

Hadaway, Jordon. “Supplier Selection.” 12Manage The Executive Fast Track. 12Manage. 6 January

2010.

Web. 7 April 2010.

“Home: Sourcing Platform MFG.com Launches India Operations.” NetIndian, 3 April 2010. Web. 8 April 2010.

“Supplier.” Business Dictionary. Online Business Dictionary, 2010. Web. 5 April 2010.

“Supplier Selection.” Westburn Publishers. The Westburn Dictionary of Marketing, 2002. Web. 5 April

2010.

Oxenbury, Alan. “Making the Right Choice.” Supply Management. Supply Management, 20 July 2006. Web. 6 April 2010.

Oxenbury, Alan. “The Final Countdown.” Supply Management. Supply Management, 3 August 2006. Web. 6 April 2010.

Wallin, Cynthia. “Supplier Selection.” Brigham Young University. Microsoft PowerPoint file. 9 February

2010.