The evaluation and selection of chemical suppliers is one of the key organizational functions required for successful business growth and development. Therefore, it is essential for purchasing professionals to implement an effective process to determine supplier qualifications and business rewards.
Today we will outline the four basic stages of successful procurement. In addition, we will explore how to evaluate the responsiveness and capability of chemical suppliers and how to combine these attributes.
Selection criteria of chemical suppliers
Purchasing is expected to lead the process of evaluating competitive offers and selecting suppliers for any particular contract. The methods used for selection are some of the most important factors in the skill set of purchasing professionals.
Remember, to produce a specific result, you have to choose the right mechanism and the right resource tools. Suppliers are the basic resources used by organizations to meet their needs. If you make the wrong choice, you will never get a satisfactory result.
Therefore, although the right supplier selection requires strong human intuition, it must be carried out systematically and according to the most objective criteria that you can develop.
The first stage: evaluation and quotation
Before selecting a quotation, each buyer should adopt some evaluation process to ensure that all aspects of the organization’s needs are fully considered and optimized.
The evaluation of supplier’s quotation not only includes the evaluation of its quotation, but also includes the inspection of supplier’s performance ability in the level of speed and quality requirements. Evaluate the offer based on potential risks and benefits. Before deciding to award a contract to a particular supplier, try to evaluate three key criteria: responsiveness, capability, and competitive value.
The second stage: operation capability analysis
One of the main factors to consider in determining the award will be the supplier’s actual ability to meet the needs you promised. Obviously, you don’t want to choose a vendor that is difficult to meet the required number due to capacity constraints or conflicts with other job schedules. A simple ratio of current output to capacity can provide a valuable indication of this capability.
Another good idea is to ensure that potential suppliers have the ability to properly arrange orders and track current production operations to meet customer commitments. Be able to benchmark all of these standards with customer references from suppliers.
The third stage: Determination of technical capability
Another important key capability that needs to be evaluated is the supplier’s technology and technical capability. Make sure your potential supplier has all the necessary equipment, tools and talent to meet your requirements. You can determine this through your track record and active participation in industry activities.
Compare the number of patents a company owns with its competitors. Check whether it often leads the market with the introduction of new products, and to what extent it funds its research and development efforts. Don’t forget to consider all the necessary licenses, insurance and supplier certification.
The fourth stage: financial analysis
In recent years, financial performance analysis has become more and more important among most CEOs and CFOs. Financial analysis helps to assess the overall supply base risk factors, and is often necessary to meet audit compliance requirements. Financial ratio helps to select and determine the qualification of suppliers according to their financial strength, leverage and competitive advantage.
To evaluate a single financial ratio correctly, the key is to combine it with the historical performance of suppliers or the ratio of similar companies in the industry. It’s also a good idea to check financial trends regularly.
Effective purchasing management begins with establishing appropriate initial selection criteria and ensuring the selection of the right suppliers.
It often happens that the lack of preparation and effort in this process leads to predictable disastrous results: the wrong supplier is selected or the chemical suppliers performs poorly. That’s why you should have a clear understanding of supplier selection methods and use them professionally.
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