Strategic Vendor Selection and Procurement Process
Vendor Selection and Procurement Process
Information We Request from Suppliers
Once we compile a list of potential suppliers, we contact them by letter or in person to request the necessary information. The information focuses on three key aspects:
- Economic Conditions: Price per unit per lot, commercial discounts, rebates and implementation, packaging costs, transportation costs and insurance, payment, and deferment fees.
- Technical Conditions: Technical specifications, quality, special packaging, assembly and installation, warranty period, user training, and after-sales parts and service.
- After-Sales Services: Delivery, return of surplus, price review, and other services.
Vendor Selection Criteria
The assessment process allows for a pre-selection among providers, prioritizing those demonstrating financial soundness and quality products. The factors related to the product and the supplier include:
- Technical features and ease of use.
- Training offered by the supplier and the time required.
- Flexibility of the supplier to satisfy customer needs.
- Trust and understanding between buyer and seller, ensuring comfort in the supply order.
Once a supplier or suppliers are chosen, we must respond to all companies that submitted bids. We will indicate to non-selected suppliers the reasons why their conditions were not accepted, as they may submit new offers. It is convenient to leave a door open for possible future negotiations.
Key Features for Vendor Evaluation
Here’s a list of features that can be used to evaluate vendors:
- Supplier’s general reputation.
- Financial conditions.
- Supplier flexibility to adapt to the company’s needs.
- Experience with the supplier in similar situations.
- Technical service offered.
- Confidence with the seller.
- Accommodation in the provision of the order.
- Data on the adequacy of the order.
- Price.
- Specifications.
- Ease of use.
- Preferences of the primary user of the product.
- Training offered by the supplier.
- Time required for training.
- Confidence in the promised delivery date.
- Ease of maintenance.
- After-sales service.
Needs Analysis
The purchasing department, after receiving the newsletters, proceeds with their classification. The typical process is as follows:
- Prioritize applications for materials with low stock levels.
- Check if the item is used regularly or if it is a first-time purchase.
- Sort newsletters for homogeneous materials, items supplied by multiple vendors, or imported products.
- Consult with the future user before ordering.
The next step is to determine the required quality of the materials, the quantity to be ordered, delivery time, financial conditions, etc. When manufacturing, warehouse, and sales departments are involved, decisions on how much to buy, when to place the order, and at what price, are generally resolved in the technical or sales department. Conditions regarding the quantity of each order, or whether to make a single order in installments, will affect the rest of the procurement process. This involves using information from company files, along with the storage system, purchasing policy, and the economic situation.
Request for Proposal and Budget
The phase of requesting bids and budgets is carried out in the following cases:
- When the activity is first initiated.
- When a new product needs to be purchased.
- When we are not satisfied with current vendors.
- To expand the portfolio of suppliers.
- To respond to recent publicity.
Because the petition process incurs an economic cost, we ensure to send the request only to providers whose responses are likely to include an offer of interest.
Depending on the procurement policy adopted by the company, several factors influence the decision to buy from the manufacturer, wholesaler, or both, including:
- The type of product.
- The quantity requested in each order.
- The location of the store.
- The services offered by the supplier.