The Art of Supplier Selection!

April 22nd, 2014

How are you selecting your suppliers to review for RFIs, RFP, and RFQs?

Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.

Each year companies spend millions of dollars researching markets and categories, and the suppliers that support them.  Some of this work is done internally and some of this work is performed by 3rd party strategic sourcing and research companies like Gartner or Forrester.  The goal of the research is always to understand who the players are, where they are strong, where they are weak and how they compare to other players in the space.  These results eventually help companies make decisions and are the basis by which presentations are requested and who should be invited to submit proposals for business.

The National Suppliers – National Suppliers are essential for almost any sourcing project, especially for those companies with a nationwide presence.  National players are usually the leaders in the industry and have a better handle on trends from coast to coast as well as the experience to lead big projects.  The downside to National players is that they are not always right for “niche” projects that need a very focused tool or service.  National players are also situated within the market and their customer base in a way that they are not always as hungry from a pricing perspective as some of their smaller competitors.  While National players can come with a higher price point, however, their experience and coverage usually make up for it.

The Regional/Sub-Category Suppliers – The next tier of suppliers is one that contains large regional companies or companies who focus on a big portion of an overall category.  An example of the latter would be if a company was looking at Maintenance, Repairs and Operation spend and wanted to include some companies that specialized in only a few products that made up a large portion of the spend but nothing else.  Everyone wants to go with a single award supplier because it is easier to manage but the reality is that single supplier awards don’t always make as much sense as splitting the business geographically or categorically between 2-3 vendors.  This creates a great opportunity for this tier of suppliers to feel they have a legitimate shot at winning business and keeps them aggressive in their proposals.

The Local/Niche Suppliers – Many people would believe that after the first two groups of suppliers, that it does not make much sense to include the smaller local or niche vendors.  This assumption would be wrong.  Procurement projects, especially those for large National companies, often see that huge portions of the spend can be found in only 2 or 3 locations.  In these cases, a local supplier may already be supporting the company very well and should be included in any sourcing project.  Also, in the case above with MRO example, if a company only wanted to focus on a section of parts like filters, they would likely start with being focused on niche suppliers but would also invite large regional and National players as potential secondary suppliers.  This process allows a company to leverage a potential existing deal with a National or Regional player while keeping a local incumbent honest.

For more information on how SafeSourcing can assist with helping you business find the right mix of suppliers to include in your next sourcing event please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

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