Choosing the right supplier is one of the key factors for a successful business. It is on the suppliers that the uninterrupted supply of the necessary raw materials and materials depends.
There are a number of well-developed methods for choosing a supplier. It is worth deciding which company to choose for yourself.
Rating method
The rating method is the most popular when choosing a supplier. The analysis is carried out in several stages. Initially, it is necessary to develop a list of criteria for selecting a supplier, and then determine the specific weight (significance) of each of them on a ten-point scale. The criteria can be price, reliability, quality of goods, granting a deferred payment, the possibility of supplying large quantities of goods, and the financial condition of suppliers.
The criteria depend on the type of goods. In the conditions of uniformity of quality characteristics of goods, price parameters come to the fore, with uniqueness and exclusivity - reliability and continuity of supply.
Further, each supplier is assigned scores on a ten-point scale for each parameter. Then they are multiplied by specific gravity and summed up. This is the final score for the company. Such operations are performed with each applicant for the role of supplier. The most optimal partner is selected based on the points received.
This method seems extremely simple only from the outside. In practice, serious difficulties arise that are associated with a lack of information for making objective assessments. Also, the working conditions declared by suppliers may differ from the real state of affairs.
Cost estimation method
This method selects a supplier from whom the purchase of goods (raw materials) is associated with the lowest costs and is distinguished by the highest profitability. All possible costs and revenues are analyzed for each supplier. These are, for example, transport, marketing, insurance costs, etc. In this case, logistical risks are taken into account.
We can say that cost estimation is one type of ranking method. Only here price criteria are analyzed in more depth.
Dominant characteristics method
In this case, not a multivariate model of criteria analysis is taken as a basis, but only one criterion is taken into account. This can be price, delivery schedule, etc. This method is simplified as much as possible, but ignores other selection factors.
Also, some analysts emphasize the informal assessment of suppliers and the importance of personal contacts. Such an assessment of communications with the supplier cannot be ignored in the selection procedure.
