Selecting A Vendor:
Your Vendor Selection Criteria
Selecting a vendor is probably one of the most nerve wracking but
crucial activities a business must undertake. Your vendors will be
delivering your direct purchases – those that you use to produce the
products you sell and your indirect purchases – those that keep your
business running effectively.
When you are selecting a potential vendor, you are selecting a partner
in your business and you will trust them to work with you in a
professional and profitable manner. It is important that you chose a
company that can supply your requirements now and for the near future.
12 vendor selection criteria
- Years in business
You need to know that the company is established and ready to service your requirements.
- Ability to constantly supply products or services.
need your products and services on a regular basis. A vendor that has
supply issues will affect your ability to supply your customers and this
is an important factor when selecting a vendor.
- Ability to supply all the products required or the complete solution.
This is particularly necessary when you are looking for a one of business solution such as a new computer system.
You may also be attempting to rationalize the number of vendors you
are dealing with or wish to purchase a product line from one vendor
It would be particularly difficult to obtain good terms
if you need to purchase just a small range from another supplier,
because your chosen vendor was unable to supply the complete range.
- Flexibility to allow changes in orders or product lines.
businesses need to change their orders sometimes – if your vendor
heavily penalizes you for doing this – perhaps they are not the one for
you and you need to move on with selecting a vendor.
- Substantial catalogue of products or range of services.
not only indicates an established vendor of size, but also means that
you have flexibility in your ordering. As your business grows, you can
keep with the same vendor. It also means that you are able to minimize
the number of vendors you are dealing with.
- Appropriate supply of internal experts that can answer questions you may have.
Again, this is very pertinent if you are purchasing a high value service, but we all need experts at some time or other.
- Testimonials and references.
These are valuable if you can check that the vendor is reliable and as they purport to be.
- Sustainability and financial stability.
The last thing you want is to have to change your vendors very quickly because one of them has gone out of business.
Discounts on the price list are always negotiable, but they are an important part of selecting a vendor.
- Delivery times.
You need to know that deliveries
can be made where and when you want them. The number of deliveries per
week or month may also be important to you.
- Terms of business.
Payment terms are particularly important as they impact upon your cash flow.
- Customer service.
Always an important part of any
relationship. What is the availability of ordering and help staff? Are
they cordial, professional and easy to contact. No one likes hanging on
the end of the phone being told by a machine, “your call is important
to us” !
Selecting a Vendor - Conclusion
As you can see there a considerable amount of criteria to consider
when selecting a vendor but then it is an important undertaking that
will make a considerable impact on the success of your business.
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