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Home » News » Company news » How to choose the right supplier

How to choose the right supplier

2017-11-06 04:10:00

1. Factors influencing supplier selection

Suppliers are part of an open supply chain system, so vendor choices are also affected by a variety of economic, political and other factors.

1.1 quality factors.

Quality is the survival of the supply chain, the use of the product value is based on product quality, which determines the quality of the final consumer goods, affecting the product's market competitiveness and share. Therefore, quality is an important factor in supplier selection.

1.2 Price Factors Low prices means that enterprises can reduce the cost of their production and management, and enhance the competitiveness of enterprises and increase profits, has a clear role, is an important factor in supplier selection. However, the lowest price suppliers are not necessarily the most suitable, but also consider the product quality, delivery time and shipping costs and many other factors.

1.3 Delivery on time factors.

Whether the time and place at the agreed time and place will be shipped to directly affect the continuity of production and supply activities. Will also affect the inventory levels of supply chains at all levels, and then affect the business response to the market, interrupting the manufacturer's production plan and sales plan.

1.4 varieties of flexible factors.

In order to survive and develop in fierce competition, the products produced by enterprises must be diversified to meet the needs of consumers and achieve the goal of possessing markets and obtaining profits. The diversification of products is based on the flexibility of the supplier's variety, which determines the type of consumer goods.

1.5 Other factors.

Including design capabilities, special skills, the overall level of service, project management capabilities and other factors.

According to the research on "CIMS - Supply Chain Management" in 1997, the data show that the quality of the main criteria is that quality is the main criterion for enterprises in our country when choosing suppliers, accounting for 98.5% of the enterprises considering the quality factor and the second is the price.

2. Choose the supplier's principle

The basic principle of supplier development is "Q.C.D.S" principle, that is, the quality, cost, delivery and service principle.

Of the four, the quality factor is paramount, starting with verifying that the supplier has a stable and effective quality assurance system and confirming that the supplier has the equipment and process capability to produce the particular product it needs.

Second is the cost and price. It is necessary to use the value engineering method to carry out the cost analysis on the involved products and realize the cost saving through the win-win price negotiation. In terms of delivery, it is necessary to determine if the supplier has sufficient production capacity, sufficient human resources and the potential for capacity expansion. 

The last point, it is also very important is the supplier's pre-sales and after-sales service record.

3. Supplier selection steps

3.1 The supplier plays an important role in the supply chain. The supplier selection mechanism is diversified. Therefore, the decision-maker of the enterprise selects the supplier according to the local conditions and needs a detailed analysis of the internal and external environment in which the enterprise is located. According to the long-term development of the enterprise Strategy and core competitiveness, choose the theory and method suitable for the enterprise or industry, and formulate corresponding implementation steps and implementation rules. Different enterprises in the choice of suppliers, the steps used will be different, but the basic steps should include the following aspects.

3.2 Establishment of supplier selection team.

Enterprises need to set up a special team to control and implement supplier evaluation. The team members mainly come from departments closely related to the supply chain such as procurement, quality, production and engineering. Team members must have team spirit, but also should have some professional skills. The selection panel must be supported by the top leadership of both purchasing and supplier companies.

3.3 Analysis of the market competition environment.

Businesses must know what the current product needs and what the product type and characteristics are, in order to identify customer needs and confirm the need to establish a supply relationship. If the supply relationship has been established, the need to confirm changes in the supply partnership needs to be identified on the basis of changes in demand, the current status of existing suppliers is analyzed, and the problems existing in the enterprises are summarized.

3.4 Establish the goals of supplier selection.

Businesses must determine how the supplier evaluation process is implemented and must establish substantive goals. Supplier evaluation and selection is not only a simple process, but also a business process itself, the process of restructuring. If implemented well, it can bring a series of benefits.

3.5 Establish supplier evaluation criteria.

The supplier evaluation index system is the basis and standard for enterprises to conduct comprehensive evaluation of suppliers. It is an index that reflects the different attributes of complex systems formed by the enterprises themselves and the environment, and is an ordered collection of subordinate relationships and hierarchical structures. The evaluation of suppliers in different industries, enterprises and different product needs and environments should be the same, but the supplier evaluation criteria should cover the following aspects: supplier performance, equipment management, human resource development, quality control, cost Control, Technological Development, Customer Satisfaction, Delivery Agreements and more. According to the actual situation of enterprises and suppliers choose the time span, the requirements of suppliers are also different, according to the length of time, respectively, the corresponding short-term and long-term standards.

In determining the supplier's selection criteria, short-term and long-term standards must be taken into consideration. By combining the two, a more complete selection of criteria can be made and suppliers can be evaluated using criteria to find the right supplier.

3.6 Supplier participation.

Once the company decides to implement the supplier selection, the selection team needs to involve the suppliers in the design process of the selection as much as possible to confirm whether they have the desire to achieve higher performance level.

3.7 Selected suppliers.

The main job is to investigate and collect all kinds of information about the production and operation of suppliers. On the basis of collecting supplier's information, we can use some tools and techniques to conduct supplier selection.

3.8 Implementation of supply cooperation.

In the process of implementing the supply partnership, market demand will also continue to change. Enterprises can be based on the actual situation of the timely modification of supplier selection criteria, or to re-start the supplier evaluation options. When re-selecting suppliers, old and new suppliers should be given enough time to adapt.

4. Supplier selection method

4.1 Intuitive judgments.

Intuitive judgment refers to a method of selecting suppliers through investigation, consultation, comprehensive analysis and judgment. It is a subjective judgment method that is mainly to listen to and adopt the opinions of experienced purchasing staff or directly By the procurement staff to make judgments based on experience. The quality of this method depends on the supplier information is mastered correctly, complete and decision-makers to analyze and judge the ability and experience. This method is simple, fast, but scientifically lacking in the exhaustiveness of the information it holds and is often used to select suppliers for non-essential raw materials.

4.2 Assessment method of choice.

On the basis of a full investigation and understanding of suppliers, further careful assessment, analysis and comparison of supplier selection methods.

Supplier surveys can be divided into preliminary supplier surveys and in-depth supplier surveys. Each phase of the survey has a supplier to choose the problem, and the purpose and basis of choice is different.

The initial supplier survey object selection is very simple, the basic basis is the product specifications, quality and price level, production capacity, transport conditions. A few of the suppliers selected for these conditions are the subjects of the initial supplier survey. In-depth supplier survey the choice of the object is based on the impact of business-critical products, suppliers of important products. To these suppliers to conduct an in-depth study assessment, the selection criteria are mainly the strength of the enterprise, product production capacity, technical level, quality assurance system and management level. After evaluating each evaluation index, it is necessary to make a comprehensive assessment.

After passing through the trial operation phase and obtaining the comprehensive result of each supplier, the supplier can basically be finalized.

4.3 Tender selection method.

When the procurement of large quantities of goods, the supply market is highly competitive, you can use the tender method to select suppliers. The purchaser as the tenderer, advance the conditions and requirements of the procurement, invite many suppliers and companies to participate in the bidding, and then the purchaser selects the transaction object from the preferential process in accordance with the prescribed procedures and standards at a time, and puts forward the bidder signing the most favorable conditions Agreement and other processes. Note that the entire process requires openness, fairness and merit.

4.4 Negotiate options.

In the choice of suppliers more difficult to choose the purchasing unit, you can also use the method of negotiation choice, that is, by the procurement unit to select more favorable supply of several suppliers, with their respective consultations, and then determine the appropriate supplier . Compared with the method of bidding selection, the method of negotiation and selection is more secure due to the fact that the two parties can fully negotiate with each other in terms of product quality, delivery date and after-sales service. However, due to the limited range of choices, the cheapest method is not necessarily available and the supply conditions are most favorable Suppliers. When the procurement time is more urgent, fewer tenders, supplier competition is not intense, ordering materials specifications and technical conditions are more complicated, the method of negotiation choice than the tender selection method is more appropriate.

5. Problems to be aware of when choosing a supplier

5.1 Home-made and "Outsourcing" Procurement.

In general, the higher the ratio of outsourcing, the greater the chance of selecting a supplier and the main target being a specialized manufacturer capable of division of labor. Through outsourcing, companies can focus on their core competencies and avoid distractions.

5.2 Single supplier and multiple suppliers.

A single supplier refers to a certain item focused on a supplier order, the advantages of this purchase is the close relationship between supply and demand, the quality of purchased goods is stable, the purchase cost is low; the disadvantage is that compared with other suppliers, easy Loss of quality, the more favorable price of the supplier, the purchase of mobility is small, the other if the supplier problems will affect the production and business activities of the enterprise. A number of suppliers point to the number of items needed to order, the advantages and disadvantages of just a single supplier contrary.

5.3 Domestic Purchasing and International Purchasing.

Select the domestic suppliers, the price may be relatively low, due to geographical proximity, you can achieve on-time production or zero inventory strategy; select the international suppliers may purchase items that are not available to domestic enterprises to enhance their technical content and expand supply sources.

5.4 Direct purchase and indirect purchase.

If it is a large number of procurement or the necessary items have a significant impact on the production and operation of enterprises, you should use direct procurement, so as to avoid the middlemen fare increase in order to reduce costs; if the purchase of a small quantity or procurement of goods on production and business activities little influence, you can indirectly Procurement, save the procurement of energy and costs.

5.5 Avoid the lack of scientific options.

At present, the management system of many enterprises in our country is not perfect and there is no scientific way to choose suppliers. As most of the projects choose suppliers, they mostly refer to all kinds of written materials and self-introduction provided by suppliers themselves In the market, word of mouth, or by personal subjective imagination, suppliers choose to participate in the bidding, so the choice of suppliers, the human factor is relatively large. In addition, in the selection of suppliers of standards, the current business selection criteria are more focused on the supplier's product quality, price, flexibility, delivery on time, lead time and volume, etc., did not form a comprehensive supplier comprehensive evaluation index System, can not make a comprehensive, specific and objective evaluation of suppliers, such problems should be avoided.

6. Precautions

6.1 Supplier's industry experience and customer base.

6.2 The reputation of the supplier.