Second of five steps for a successful strategic sourcing project.
After the identifying the categories that will be sourced and the baseline and scope of the projects, Project Managers will now need to develop the supplier base. Depending on the size of the incumbent supplier base and on the availability of other alternative suppliers in the market, companies may opt to settle only with the current suppliers or introduce new suppliers that are equally capable. Regardless, it is advised to develop a standard supplier qualification process to select the correct suppliers that will be invited for the bidding. The Project Manager’s ability to achieve such feat would facilitate to the successful implementation of any bidding event and ultimately, to provide the company with competent vendors that could provide the goods and services required at the best market price.
Companies must be then clear on what they look for from each potential supplier, be it in the scale of facilities and capabilities, diversity of customer base, financial success, etc. These considerations must be completely captured from each interested supplier and it helps to develop standardized forms that suppliers could fill out. Project Managers could also establish company-wide system of scoring supplier responses in order to maintain objectivity during evaluation and reduce bias from other stakeholders in the organization. Generally, the more qualified suppliers there are, the more competitive the bidding would be. However, there are certain categories that would have limited supplier base, such as coal and petroleum, and in such incidences, the company should focus its efforts in managing the risks entailed in these categories.
Towards the end of this process, the Project Managers should be able to arrive at the list of vendors that will be formally invited to the bidding. They must also be able to sufficiently defend to any internal sponsor or external party (i.e., suppliers who have not passed the screening) the basis of their qualifications.
– Jules Falzado, Senior Process Consultant, ECCI