Supplier Selection Strategies and Criteria

Supplier selection criteria for a particular product or service category should be defined by a “cross-functional” team of representatives from different sectors of your organization. In a manufacturing company, for example, members of the team typically would include representatives from purchasing, quality, engineering and production. Team members should include personnel with technical/applications knowledge of the product or service to be purchased, as well as members of the department that uses the purchased item.

Common supplier selection criteria:

• Previous experience and past performance with the product/service to be purchased.
• Relative level of sophistication of the quality system, including meeting regulatory requirements or mandated quality system registration (for example, ISO 9001, QS-9000).
• Ability to meet current and potential capacity requirements, and do so on the desired delivery schedule.
• Financial stability.
• Technical support availability and willingness to participate as a partner in developing and optimizing design and a long-term relationship.
• Total cost of dealing with the supplier (including material cost, communications methods, inventory requirements and incoming verification required).
• The supplier's track record for business-performance improvement.
• Total cost assessment.

Methods for determining how well a potential supplier fits the criteria:

• Obtaining a Dun & Bradstreet or other publicly available financial report.
• Requesting a formal quote, which includes providing the supplier with specifications and other requirements (for example, testing).
• Visits to the supplier by management and/or the selection team.
• Confirmation of quality system status either by on-site assessment, a written survey or request for a certificate of quality system registration.
• Discussions with other customers served by the supplier.
• Review of databases or industry sources for the product line and supplier.
• Evaluation (SUCH AS prototyping, lab tests, OR validation testing) of samples obtained from the supplier.

Excerpted from Duke Okes and Russell T. Westcott, editors, Certified Quality Manager Handbook: Second Edition, ASQ Quality Press, 2001, pages 245-246.