How to choose the right supplier
The cheapest supplier isn’t always the best. A supplier that delivers late or sends poor-quality goods costs your business dearly, even if cheap on paper.
Supplier selection is evaluating the firms you buy goods and services from on price, delivery and quality, and choosing the best fit. A good choice rests not on a single number (price) but on the supplier’s past performance. The answer to “who keeps their word?” should come from data, not feel.
The trap of looking only at price
The supplier with the lowest price, if delivering late, halts your production; if sending defective goods, creates returns and customer dissatisfaction. These hidden costs can far exceed the price gap. So evaluation must be three-dimensional.
3 dimensions of supplier performance
- Delivery: on-time percentage and average delay. Does it arrive on the promised date?
- Quality: reject rate on inspected goods. Is what it sends defect-free?
- Price: real cost in a comparable currency. But not alone.
How do you measure performance?
In a purchasing program, when each order closes the supplier’s delivery is measured automatically: the last receipt date is compared with the expected delivery. Average delay, reject rate and inspection coverage accumulate per supplier. With few inspections the rate is treated as unreliable and flagged — because 100% from 2 inspections may not reflect reality.
Let this table, not your feelings, decide which supplier to favour in the next quote round. The right supplier isn’t the cheapest but the one offering the most reliable total value.
See who keeps their word, with data
Supplier delivery, reject rate and delay on one screen. Try the purchasing module in a demo.
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