The supplier sourcing process typically involves several important steps, including:
Step 1 — Assess needs and requirements
Before searching for vendors, brands should evaluate the needs of each department by conducting an examination of current resources.
This includes determining the current costs as well as any additional expenses that will be incurred in obtaining the necessary items.
Step 2 — Access the market
A thorough market assessment is essential to ensure that you’re making informed decisions about your strategic sourcing. This involves researching and analyzing the market trends, competitive intelligence, key vendors, and industry best practices.
Step 3 — Build sourcing guidelines
To get the best from your supplier pool while minimizing risk and cost, it’s important to determine your method and location for procurement.
Start by defining your business objectives and setting minimum requirements for suppliers. Then, you can create a set of selection criteria based on which suppliers meet your needs, capabilities, and resources. This will help you choose the right vendors for your business.
Step 4 — Select the sourcing process
The next step is selecting the appropriate method for soliciting bids. One common approach that many businesses use is issuing a request for proposal (RFP).
The RFP is a document drafted by the procurement team that seeks proposals through a bidding process. It outlines the specifications, requirements, pricing, legal and financial terms, and evaluation criteria for the desired product or service.
Step 5 — Negotiate
After receiving responses from multiple suppliers to your RFP, it’s time to narrow down the list of potential suppliers. You should review the information or conduct clarification interviews if needed.
Having comprehensive information on each supplier will facilitate the decision-making process. Additionally, storing all information in one place reduces the need for lengthy email exchanges and conference calls.
Step 6 — Incorporate vendors into the implementation process
Once the negotiation phase is complete, it’s time to finalize the supplier selection and inform the chosen partners.
The next move you need to make after selecting the ideal supplier is to ensure the smooth delivery of goods and services through annual and inventory forecasting.
Step 7 — Monitor supplier performance through benchmarking
Vetting vendors’ performance regularly is crucial to assess their progress. This starts with establishing a baseline for the product’s current status, continuously tracking its performance, and confirming that the desired outcome is being achieved.
By taking these measures, you can quickly identify any issues during implementation and notify your suppliers accordingly to help mitigate the problem’s impact on business.