Vendor Selection Process

Successful Vendor Selection Process

The vendor selection process can be a very complicated and emotional undertaking if you don’t know how to approach it from the very start. Success here will put you on the right track in selecting the right vendor at the right price. Lack of effort, poor planning or taking shortcuts will serious jeopardize the success of the vendor selection process. Here are five steps to help you select the right vendor for your business. This guide will show you how to analyze your business requirements, search for prospective vendors, lead the team in selecting the winning vendor and provide you with insight on contract negotiations and avoiding negotiation mistakes.

1. Analyze the Business Requirements:

Before you begin to gather data or perform interviews, assemble a team of people who have a vested interest in this particular vendor selection process. The first task that the vendor selection team needs to accomplish is to define, in writing, the product, material or service that you are searching for. Next define the technical and business requirements. Also, define the vendor requirements. Finally, publish your document to the areas relevant to this selection process and seek their input. Have the team analyze the comments and create a final document. In summary:

Assemble an Evaluation Team: The evaluation team must be composed of decision makers and knowledgeable employees from every area that has a stake in the successful outcome of selecting a vendor for the product, material or service that is going to be sourced outside of your company. For parts and services that only affect a few small areas, a small team of three to five people will be sufficient. For larger products and services that affect several areas (or maybe the entire company), five to ten people may be required. More than 10 people may become unmanageable.

Define the Product, Material or Service: Writing a definition of the product, material or service that you...