SUPPLIER SELECTION

PROCESS
Luis Rojas
Choosing the right supplier involves much more than scanning
a series of price lists. Your choice will depend on a wide range
of factors such as value for money, quality, reliability and
service. How you weigh up the importance of these different
factors will be based on your business' priorities and strategy.
A strategic approach to choosing suppliers can also help you to
understand how your own potential customers weigh up their
purchasing decisions.
 THINKING STRATEGICALLY WHEN
SELECTING SUPPLIERS
The most effective suppliers are those who offer
products or services that match - or exceed - the
needs of your business. So when you are looking
for suppliers, it's best to be sure of your business
needs and what you want to achieve by buying,
rather than simply paying for what suppliers want
to sell you.
THE NUMBERS GAME
WHAT YOU SHOULD LOOK FOR IN A
SUPPLIER
• Reliability
• Remember - if they let you down, you may let your customer down.
• Quality
The quality of your supplies needs to be consistent - your customers
associate poor quality with you, not your suppliers.
• Value for money
The lowest price is not always the best value for money. If you want
reliability and quality from your suppliers, you'll have to decide how much
you're willing to pay for your supplies and the balance you want to strike
between cost, reliability, quality and service.
 Strong service and clear communication

You need your suppliers to deliver on time, or to be honest and give you
plenty of warning if they can't. The best suppliers will want to talk with you
regularly to find out what needs you have and how they can serve you
better.

Financial security

It's always worth making sure your supplier has sufficiently strong cash
flow to deliver what you want, when you need it. A credit check will help
reassure you that they won't go out of business when you need them
most.
A partnership approach

A strong relationship will benefit both sides. You want your suppliers to
acknowledge how important your business is to them, so they make
every effort to provide the best service possible. And you're more likely
to create this response by showing your supplier how important they
are to your business.
 IDENTIFYING POTENTIAL SUPPLIERS

You can find suppliers through a variety of

channels. It's best to build up a shortlist of
possible suppliers through a combination of
sources to give you a broader base to choose
from.
CHOOSING A
SUPPLIER
SELECTION OF SUPPLIER BY
WEIGHTING FACTORS
METHOD COMBINEX
STEPS TO FOLLOW
• Determine potential suppliers or alternatives
• Selection the evaluation criteria
• Get information from potential suppliers.
• Calculate the weight or criteria matrix
0= less import
1=more import
½=Equally important
Supplier Quality Price ($) flexibility Warranty
P1 98 250000 8 1
P2 98 210000 7 2
P3 95 260000 10 0,5
P4 94 200000 8 1
P5 98 160000 9 2
P6 98 230000 8 1
Level lower than
satisfaction above 90% 255,000 above 6 As minimum 1

W1=0,3 W2=0,4 W3=0,2 W4=0,1 Respectively

WEIGHTING FACTORS
0,3 0,4 0,2 0,1
W CRITERIO Quality Price ($) flexibility Warranty TOTAL PESO
0,3 Quality 0 1 1 2 0,333333333
0,4 Price ($) 1 1 1 3 0,5
0,2 flexibility 0 0 1 1 0,166666667
0,1 Warranty 0 0 0 0 0
6
Matrix of suppliers criteria /first criterion/quality
98 98 95 94 98 98
Quality Suppliers P1 P2 P3 P4 P5 P6 TOTAL WEIGHT
98 P1 0,5 1 1 0,5 0,5 3,5 0,233
98 P2 0,5 1 1 0,5 0,5 3,5 0,233
95 P3 0 0 1 0 0 1 0,067
94 P4 0 0 0 0 0 0 0,000
98 P5 0,5 0,5 1 1 0,5 3,5 0,233
98 P6 0,5 0,5 1 1 0,5 3,5 0,233
15
Price

250000 210000 260000 200000 160000 230000

Price ($) Suppliers P1 P2 P3 P4 P5 P6 TOTAL WEIGHT
250000 P1 0 1 0 0 0 1 0,067
210000 P2 1 1 0 0 1 3 0,200
260000 P3 0 0 0 0 0 0 0,000
200000 P4 1 1 1 0 1 4 0,267
160000 P5 1 1 1 1 1 5 0,333
230000 P6 1 0 1 0 0 2 0,133
15
Flexibility

8 7 10 8 9 8
flexibility Suppliers P1 P2 P3 P4 P5 P6 TOTAL WEIGHT
8 P1 1 0 0,5 0 0,5 2 0,133
7 P2 0 0 0 0 0 0 0,000
10 P3 1 1 1 1 1 5 0,333
8 P4 0,5 1 0 0 0,5 2 0,133
9 P5 1 1 0 1 1 4 0,267
8 P6 0,5 1 0 0,5 0 2 0,133
15
Decisión final
Suppliers Calidad Precio ($) Flexibilidad WEIGHT
P1 0,23 0,07 0,13 0,13
P2 0,23 0,20 0,00 0,18
P3 0,07 0,00 0,33 0,08
P4 0,00 0,27 0,13 0,16
P5 0,23 0,33 0,27 0,29
P6 0,23 0,13 0,13 0,17
w 0,33 0,50 0,17 1