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ASCM Insights

Choose the Best Supplier in 5 Steps

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Choosing your next product or service supplier can be a daunting task. Procurement best practices have evolved such that supplier selections can no longer be based on price alone. Now, it’s important to find a partner that delivers value, is dependable, offers expertise, aligns with your organization’s core beliefs and so much more.

As supplier relationships become increasingly important, there’s also more to lose if you choose the wrong partner. However, a solution called the RFPartner process helps organizations balance getting the best solution with the suppliers’ needs for a secure partnership, predictable value and mitigated risk. Companies use the RFPartner process to assess capabilities, solution design, compatibility and cultural fit of potential suppliers while assuring an open, fair and competitive process.

RFPartner takes a pre-qualified set of bidders through a clearly defined process, designed to allow both organizations to get to know each other, see if their cultures are compatible, agree on shared objectives, find how the parties will recognize that progress is being made and decide how they will manage the relationship to ensure it continues to deliver exceptional outcomes.

Step 1: Scan the market to find the companies that are capable and willing to do what you are seeking. This means that you first have to clearly define what you are trying to achieve and what capabilities will be necessary so that you know what types of partners to look for. Send applicable suppliers a request for information or a request for qualifications to determine how capable they are and how interested they are in competing to win your business and deliver results.

At the same time, prepare a list of criteria that, if met, will make a particular supplier a strong potential partner. Compare the information you receive from the suppliers with your list. This should help you narrow down your list to three-to-five possible contenders. If your list is longer than this, you need stricter criteria for choosing your partner. If your list is shorter, extend your search to find more suitable contenders.

Step 2: Dig down deeper to reduce this list to a few top contenders, send them a request for expressions of interest that explains the challenge you are facing, the bid process and what you need from a supplier. By this stage, sensitive commercial and technical information will be shared by you and the providers, so strict nondisclosure agreements should be in place. These first two steps can take as long as two weeks for private-sector companies and as long as four weeks for government organizations.

Step 3: Workshop it. This is the meat of the strategy and can take as long as 16 weeks. With your contenders that are ready and willing to move forward, conduct a series of formal workshops to test how well the companies and their key staff work together and to dig deeper into potential solution designs and how to make them work. Each workshop seeks to progress the deal definition while allowing the assessment of cultural fit and capabilities as well as informing and testing solution designs. This means that the buying organization’s staff will be undertaking several similar workshops with each of the short-listed bidders around the same time. And yes, this is a big commitment for all the stakeholders.

Start with concept workshops. The participants of these meetings have two main goals: First, develop a joint objective that has real and significant benefits for both partners. When the supplier knows what’s in it for them, they will be more motivated to bring their best ideas to the table. As part of this, these meetings also should describe the project scope and lay out three to five desired outcomes to bring greater detail to the solution concept design and the path toward it. Often, short- and medium-term wins become apparent, and these can show positive momentum and provide benefits that can be shared as incentives. Be sure to also determine how success will be measured.

Various contracting and negotiation strategies all agree that a failure to agree on objectives and scope is the most common reason complex commercial relationships fail to deliver on their promises. Agreeing on the right scope that has clear hand-off points and provides maximum opportunity to optimize internal operations is key and merits time to discuss without preconceived barriers.

Second, agree on how each party will behave in the partnership based on reciprocity, autonomy, honesty, loyalty, equity and integrity — and other intended behaviors. Discuss guardrails, or the positions that are unacceptable to either party. This can include factors such as safety infractions, intellectual property ownership, a lack of financial transparency and the like. Talk about what should happen in the partnership if any of these issues happen. It’s better to have a plan for this in advance to assuage both parties’ concerns rather than have a party walk away because of unknowns.

At the end of the workshop, each potential supplier should submit a written concept submission that summarizes the opportunity and interim benefits as they see them and how they plan to achieve them. These concepts are used to reduce the bidding pool to the last two best contenders.

You may find at this point that there really is only one viable contender. In this case, you can stop the process here. It makes a lot of sense to focus only on that partner. Keeping a party in the running that has no real chance of winning the business is a waste of everyone’s time. In addition, your preferred partner might lose interest if you keep stringing them along. 

However, if you still have two great options, it’s time to move on to alignment workshops. Prepare a strengths, weaknesses, opportunities and threats analysis about each finalist to determine where to probe them. Share with each contender a list of all issues that must be resolved before a deal is reached, and ask them to do the same with you. This can help set the agenda of the meetings and reach resolutions or determine that the fit just isn’t right.

This also is an important time to ensure that there is cultural compatibility. In addition, participants should figure out the payment structure, a governance plan for how the project will be managed and who will be responsible for handling the various problems that come up, and a risk management strategy. At the end of these meetings, have the finalists submit formal project proposals.

Step 4: Check the facts to confirm that the representations made in these proposals are accurate. Call references to verify the supplier’s critical capabilities.

Step 5: Select your finalist and work with them to develop a contract that benefits both parties. For clarity, be sure to include elements about the project scope and other expectations, how success will be measured, how and when your partner will be paid, and when and how this project relationship will end. Again, ensure that both parties will be satisfied at the end of the project in order to leave the door open for future project relationships with this supplier that you have invested so much time in researching. 

Then, continue to uphold your agreement. Be supportive and helpful during the onboarding process and do your part to provide ongoing governance as needed and as agreed upon. If key staff members leave either company, be sure to train the new team members too.

It’s inevitable that business priorities will change as the project progresses. Avoid surprising your supplier and instead stick to the original philosophy of your agreement. Behave in the way that you promised you would. This will help you best support your relationship with your supplier and ensure a smooth path to project success.

When selecting a supplier for a project, you often only have one chance to get it right. Selecting the best partner and creating a contract that drives strong alignment is critical. A thorough and methodical process can help you evaluate your supplier options and reduce the risk of supplier relationship problems after contracts are signed and projects start. This paves the way for mutual success. 

Learn about the ASCM Supply Chain Procurement Certificate, a foundational education program designed to help both entry-level and experienced supply chain professionals expand their procurement knowledge and skills.

About the Author

Nick Seiersen

Nick Seiersen has advised several small and large organizations across Europe and North America to help them squeeze assets and costs out of their operations and supplier relationships. He may be contacted at nick@seierseninc.com.

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