The ability to conduct an effective supplier evaluation is one of the key responsibilities of any professional procurement role. In the past, buying just meant focusing on the lowest cost option. But in modern procurement, the buyer has a much more hands on role in evaluating suppliers and performing these to the best of their ability these is crucial for success.
To help you succeed, here’s 8 tips that you can think of when evaluating your next suppliers.
These are what shape the evaluation, so it’s vital that yourself and your team understand what is to be achieved by the request. To ensure people always have a fresh idea of these objectives, it’s worthwhile keeping the original business case or specification around for reference throughout the evaluation.
Don’t mix things up when working through the process. Keep the evaluation criteria and even the team the same throughout to ensure consistency. This way you can be transparent with the supplier what is being evaluated and show that the evaluation of all suppliers is fair.
Providing a point of contact who can explain the process and what will be required to suppliers at the outset solves many issues. Ensuring the process is appropriate to the size and complexity of the requirement and keeping tender documentation concise and jargon-free will smooth the process. Remember, some SME’s aren’t up to date with the industry jargon, so keep communication simple.
Set a realistic timetable, let suppliers know what it is and keep them informed of any changes. This allows them to assess their involvement and the cost of bidding. Try to avoid any delays as this introduces additional, unplanned costs for suppliers. Bear in mind that companies new to the process may need longer to respond to requests for information than more experienced players. Take this into account in planning and be prepared for more requests for clarification.
Although cost will have a role to play in your evaluation, it’s easy to get mesmerized by a tempting price and overlook other weaknesses in the submission. Be sure to evaluate every aspect of the supplier’s offerings to ensure they meet your requirements in all areas, particularly the more important ones specified in the objectives.
There are various templates out there on the web that can aid in supplier evaluation. You simply use the scores you have given for each section (and add any weighting if relevant) and it will generate a final result. This is not only very quick and hassle free, it also can help to demonstrate that the decision process is fair. Using online chat instead of emails also can speed up the communication process.
The term ‘value for money’ is very commonly used. However, the actual definition of this varies vastly from project to project. You need to understand, based on the objectives of your evaluation, what ‘value for money’ means and communicate this clearly to your team.
It’s important that you communicate the decision to all suppliers who submitted a bid, even the ones you didn’t chose. Be honest about how the decision was made and give constructive feedback about their bid, even if it wasn’t successful. This will help to maintain a good relationship in case you chose to use the supplier in future and also helps them to see where they need to improve.