One of the greatest challenges in selecting the right suppliers for your company is know what you’re looking for. In order to know what you’re looking for, you need to have a supplier selection strategy that is linked to the priorities and strategies of your firm. Then this strategy needs to be translated into specific requirements and criteria for choosing suppliers.
As companies get bogged down in the day-to-day, they will tend use a piecemeal approach for selecting suppliers. For example, if there is a need for a supplier in a particular commodity, they will try to find suppliers in that commodity that meet the immediate needs at the best price and/or best value. The selection criteria may vary depending on the needs of the day or may be ill-defined. Business pressures push us more toward action rather than planning, or toward “ready-fire-aim”.
Developing common objectives for supplier selection among multiple functions that are impacted by suppliers is challenging. One challenge is other functions’ lack of understanding of the importance of their participation and view supplier selection as soley the domain of purchasing/sourcing people. Another is a lack of a communicated or formal corporate strategy from which to derive supplier selection and sourcing strategies. Also, the fast pace of business in many companies often relegates this type of planning to the back burner with present issues taking priority.
The risks of poor or unsustainable choices increase without a robust supplier selection system. The work done up front saves a lot of problems and costs later on.