Choosing a supplier is a critical step for any business. Our Supplier Selection Analysis guide breaks down how to compare suppliers and ultimately choose the best one for your business.
Supplier selection analysis typically requires the following five-step process.
1. Identify Component
The process will begin with identifying the separate components that contribute to your final product and categorize them accordingly. An example has been outlined below for your reference for items that may pertain to a local coffee business.
2. Purpose of Component
Identify how this product helps your business deliver exceptional product/service and the functional purpose of the component.
For example, you are an owner of a local coffee small business and the packaging of your coffee beans requires a label. Providing a label is not only important for allowing customers to identify the product, but it would also include design aspects that would attract the customer to pique their interest in the product in the first place. Therefore, it is important that the design of the logo and label accurately reflects the business values and is attractive to its targeted audience, as it is the first impression a customer gets of the product.
3. Sourcing Requirements
Use a bulleted list of at least 4 requirements for the product being sourced and explain why this requirement is in place. The purpose of this section is to start to narrow your supplier search by defining exactly what you need.
4. Supplier Selection Scorecard
Based on the categories of components, analyze and weigh each based on the importance to the final product.
In this example, we evaluated four categories: cost/pricing, delivery, quality, and service of three label suppliers. Based on the needs of the business, we have weighted these categories respectively: 40%, 35%, 20%, and 5%. In terms of upfront cost, Uprinting definitely had the lowest price which was 100 labels for ~$30 depending on the customized print; however, OnlineLabels.com offered a price match service where they will match a competitor’s price and beat it by 10%. In lead-time, OnlineLabels offers the greatest service of having the product ready to ship in a workday of the order being processed. Most of the vendors' locations were based on the east coast, which is not the ideal location. A strength of customer service was UPrinting’s 24/7 chat which I found useful in asking questions and getting a response right away.
5. SWOT Analysis
Create a SWOT analysis identifying the strengths, weaknesses, opportunities, and threats for each supplier. After comparing the SWOT analyses, proceed with the best supplier.
Strengths are the areas your organization does particularly well and may distinguish you from competitors.
Weaknesses are areas for improvement within your organization, which are essential to your resources, systems, and procedures.
Opportunities are chances for something positive to happen whether that is in the market space or directly for your organization.
Threats can relate to anything that negatively impacts our business externally such as market shifts or supply shortages.
Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at firstname.lastname@example.org.