Supplier Selection

Training for Selecting the Right Supplier

by Scott Mathusek

10 April 2010

Supplier Selection

What will be covered

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

10 April 2010

Supplier Selection

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)
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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?
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Evaluation and Selection Process

1. 2. 3. 4. Recognize the need for supplier selection Identify key sourcing requirements Determine sourcing strategy Identify potential supply sources

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Supplier Selection

Evaluation and Selection Process

5. Limit suppliers 6. Determine method of supplier evaluation and selection 7. Negotiate and select supplier

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Supplier Selection

Recognize Need for Supplier Selection

Why are you looking for a supplier?
End of contract Problems with current supplier Have new product

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Supplier Selection

Identify Key Sourcing Requirements

What do you require from your suppliers? Are your requirements in alignment with company goals and mission? Consider Carters 10 Cs of Supplier Selection

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Supplier Selection

Carters 10 Cs of Supplier Selection

Competency Capacity Consistency Control of Process Cost/Price
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Commitment to quality Cash/finances Clean Culture and relationships Communication

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Supplier Selection

Determine Sourcing Strategy

How many suppliers are you going to need?
Single Source Multiple Source

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Identify Potential Supply Sources

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

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Supplier Selection

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Limit Suppliers in Pool

Narrow down your choices
33% 75% 100% 25% 31% 18% 36% 22% 57% 40% 43%

A
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C
Supplier Selection

E
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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

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Negotiate and Select Supplier

Perform negotiations with supplier Choose supplier and agree to terms

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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

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Practical Exercise
You and three others have narrowed the search down to four companies Using Carters 10 Cs 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
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Column1 Danny Ryan Competency 40% 30% Capacity 30% 30% Consistency 20% 20% Control of 10% 20% Process
A 77 85 95 90

Jane 25% 25% 25% 25%

B 90 85 86 95

Helen Mode Average 30% 30% 31% 20% 30% 26% 30% 20% 24% 20%
C 76 85 95 90

20%

19%
D 85 90 87 90
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Competency Capacity Consistency Control of Process

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Supplier Selection

MODE A Competency 23.1 Capacity 25.5 Consistency 19 Control of Process 18 Total 85.6 AVERAGE Competency Capacity Consistency Control of Process Total
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B 27 25.5 17.2 19 88.7 B 28.1 22.3 20.4 17.8 88.7

C 22.8 25.5 19 18 85.3 C 23.8 22.3 22.6 16.9 85.5

D 25.5 27 17.4 18 87.9 D 26.6 23.6 20.7 16.9 87.7

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A 24.1 22.3 22.6 16.9 85.8

Supplier Selection

Summary
The evaluation and selection process is much based off of company goals, missions, and preferences Use Carters 10 Cs to have a more encompassing evaluation

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Readings list
All information used for this presentation is based from information from the following sources: Fuller, Neil. How Many Cs 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. 10 April 2010 Supplier Selection 20