Selecting a new vendor can be quite the undertaking. You’re often looking at a sizeable group of candidates, all of which meet your minimum requirements for business — at least on the surface. And the field of potential vendors just gets larger and larger as the scope of materials, products, or services grow.
That’s why it’s so important to get a full understanding of the process in selecting a new vendor from the very start. It’ll save you time, money, and headaches. The following details the 6 steps you should use when selecting a new vendor:
Selecting a New Vendor: Define Your Needs
Make sure to define why it is you are interested in selecting a new vendor. Are you expanding your business to include domestic or international shipping? Are you concluding it’s time to move on from your current vendor? Before gathering information on potential vendors, assemble a team with a vested interest in the final selection. They’ll not only be working with this vendor but have the most direct knowledge on your organizational needs.
Then, challenge this team to define the product, material, or service needed. Detail any high-priority technical, business, AND vendor requirements (i.e. price, support, foresight, knowledge, flexibility, etc.). Get it all down in writing.
Next, gather input from areas affected by the selection, and ask the team to evaluate their comments before ranking the requirements in order of importance. What are your “must-haves?” What can you do without?
Do Your Homework
Start searching for potential vendors. Compile a list of those able to deliver the material, product, or service. To help narrow the field, disqualify any vendor that fails to meet your initial requirements with vendor scorecards.
Conduct First-Round Discussions
Discuss whether vendors meet your needs based on the benchmarks set with vendor scorecards. It’ll be much easier to compare one candidate to the next.
Select the Top Contenders
Those who pass the muster should move to the next phase, which is usually a site visit. Use the visits to address any remaining questions you might have about their ability to deliver.
Initiate the RFQ Process
With the field narrowed even further, your team will need to tee up the final round of evaluations. In other words, it’s time to send out a Request for Quotation (RFQ), where you’ll provide submission details, business overview, terms and conditions, detailed specifications, etc.
If you’d like to learn a bit more about RFQs, read 4 Steps to a Successful RFQ Process.
Evaluate and Decide
Review and discuss the submitted proposals with all stakeholders. Refer back to and rank the high-priority technical, business, and vendor requirements. It isn’t uncommon for the rankings to change during the selection process.
As you rank importance, assign a performance value to each requirement. This value is set based on your team’s belief in a vendor’s ability to perform that requirement. Next, calculate the total performance score for each vendor. After all of this, it’s now up to you to decide whether to award the “highest performer” with the job. Keep in mind that you will need to notify your current vendor of a change and decide how you are going to plan that exit.
If you’d like to learn more about the vendor selection process, feel free to contact us today. You can also download a copy of the vendor scorecard.