5 Tips How to Select Vendor the Right Way

Sunday, March 6, 2016, 6:00 AM | Leave Comment

There are times when all organizations look for vendors to fill certain needs. This could be for consulting, supplemental staffing, software, equipment, etc.

The vendor selection process is not hard, but it may be time-consuming to complete.

For more complex procurement needs you should consider starting with a procurement management plan.

The following process can be used in most any vendor selection process.

5 Tips How to Select Vendor the Right Way

  1. Gather and Rank the Vendor Selection Criteria

    It’s hard to select a vendor if you are not sure what your requirements are.

    Ask questions such as:

    • How will we use the vendor?

    • What problem will the vendor solve?

    • What deliverables will they produce?

    • Will we need references?

    • What are our pricing constraints?

    Each requirement should be weighted on a numeric scale, or high/medium/low, to reflect the relative importance of some requirements over others (other weighting scales can be utilized as well).

    Your sponsor and major customers and stakeholders need to review and approve this total list of requirements and weighting.

    This is the criteria you will use to select the vendor.

  2. Create Vendor Long List (Optional)

    Look for any and all vendors that might meet your needs. This can be done by searching the web, looking at trade magazines, talking to other companies, etc.

    The purpose of this step is to gather a comprehensive (but not exhaustive) list of vendors that you want to consider further.

    If you think you already know the particular vendors you are interested in, this step can be skipped, moving directly to the short list.

  3. Create Vendor Short List

    Perform an initial, high-level evaluation of the long list, looking for obvious reasons to
    eliminate some of the alternatives.

    The purpose of this step is to create a short list of potential vendors that look like they will have a reasonable chance of meeting your needs.

    You send your Request for Proposal (RFP) to this smaller list of vendors.

  4. Evaluate the Proposals

    At this point, the interested vendors on your short list have sent proposals in response to your RFP.

    You then evaluate these proposals against the selection criteria you created earlier (above).

    You can interview the vendors, set up demonstrations, make vendor site visits, etc.

    Usually some type of numerical calculation is made based on how well the vendor meets each requirement, multiplied by a weighting factor.

    The vendor with the highest score across all requirements should be the one that best meets your needs.

    When you have completed this step, you should have a first and second choice.

  5. Make Final Selection and Negotiate Contract

    At this point you should have all the required information to make the choice.

    In many organizations, the project team makes the final recommendation and then turns the process over to a formal Purchasing or Procurement organization to negotiate a contract.

    If that process does not proceed in a satisfactory manner, you should be prepared to move down to your second choice, and your third, as long as those options still meet your minimum requirements.

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This column is © copyright to www.Method123.com and originally appeared in their weekly project management tip newsletter.

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