Supplier Selection

Supplier Selection

The members of the buying centre now review the proposals and select a supplier supplier selection or suppliers. During supplier seleetion, the buying centre will often draw up a list

The stage of the business of the desired supplier attributes and their relative importance. In one survey,

buying process in which the buyer reviews

purchasing executives listed the following attributes as most important in influ­ proposals and selects a encing the relationship between supplier and customer: quality products and

supplier or suppliers. services, on­time delivery, ethical corporate behaviour, honest communication

294 • Chapter / Business Markets and Business Buyer Behaviour

Table 7.2

An example of vendor analysis

and competitive prices. 2 ­ 1 Other important factors include repair and servicing capabilities, technical aid and advice, geographic location, performance history and reputation. The members of the buying centre will rate suppliers against these attributes and identify the best suppliers. They often use a supplier evalu­ ation method similar to the one shown in Table 7.2.

The importance of various supplier attributes depends on the type of purchase situation the buyer faces. 24 One study of 220 purchasing managers showed that economic criteria were most important in situations involving routine purchases of standard products. Performance criteria became more important in purchases of non­standard, more complex products. The supplier's ability to adapt to the buyer's changing needs was important for almost all types of purchase.

Buyers may attempt to negotiate with preferred suppliers for better prices and terms before making the final selections. In the end, they may select a single supplier or a few suppliers. Many buyers prefer multiple sources of supplies to avoid being totally dependent on one supplier and to allow comparisons of prices and performance of several suppliers over time.

order­routine

• Order­Routine Specification

specification

The stage of the business The buyer now prepares an order­routine specification. It includes the final buying process in which

order with the chosen supplier or suppliers and lists items such as technical speci­ the buyer writes the final

fications, quantity needed, expected time of delivery, return policies and order with the chosen

warranties. In the ease of maintenance, repair and operating items, buyers are suppliers(s), listing the

increasingly using blanket coiifruc­ts rather than periodic purchase orders. A technical specifications,

quantity needed, blanket contract creates a long­term relationship in which the supplier promises

expected time of to resupply the buyer as needed at agreed prices for a set time period. The seller

delivery, return policies holds the stock and the buyer's computer automatically prints out an order to the and warranties.

seller when stock is needed. A blanket order eliminates the expensive process of renegotiating a purchase each time stock is required. It also allows buyers to

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write more, hut smaller, purchase orders, resulting in lower inventory levels and carrying costs.

Blanket contracting leads to more single­source buying and to buying more items from that source. This practice locks the supplier in tighter with the buyer and makes it difficult for other suppliers to break in unless the buyer becomes dissatisfied with prices or service.