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Supplier selection: Definition & important aspects for buyers
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Supplier selection in a nutshell:
Supplier selection is a systematic process for identifying and evaluating potential suppliers based on defined criteria such as quality, price, delivery reliability and technical expertise. It is of strategic importance for purchasing, as the right suppliers contribute significantly to the company's success and minimize risks.
Example: An automotive supplier carries out a structured selection process for the award of a 3-year contract for electronic components (volume: EUR 2.5 million), in which the most suitable supplier is selected from an initial 8 suppliers through multi-stage evaluations (RFI, audit, sampling) with 92 out of 100 possible evaluation points.
Contents
What is supplier selection?
Supplier selection is the process of identifying, evaluating and selecting suitable suppliers to provide goods or services to a company. It is a crucial step in procurement management and aims to find partners that meet the requirements for quality, price, reliability and service. Through a systematic approach, supplier selection ensures that business relationships are established that meet the company's strategic objectives.
Core elements of supplier selection
Significance for purchasing
In purchasing, supplier selection plays a central role in a company's success. A well-founded selection directly influences the cost structure, product quality and delivery reliability. Through strategic partnerships with the right suppliers, competitive advantages can be achieved and risk management in the supply chain can be minimized. In addition, effective supplier selection supports the ability to innovate, as selected suppliers often provide valuable impetus for product and process improvements.
Supplier selection: From manual processes to digital supplier relationship management
Supplier selection is a crucial part of procurement management that has a significant impact on a company's success. Traditionally, suppliers were selected and evaluated manually, which was often inefficient and error-prone. With the increasing complexity and globalization of supply chains, there is an urgent need for modern approaches that make the process more efficient and effective. The transition from manual methods to digital supplier management opens up new opportunities.
Old: Manual supplier selection
Traditional approach:
In traditional supplier selection, potential suppliers were often identified on the basis of personal contacts or recommendations. Supplier evaluation was carried out manually through extensive analysis of offers, paper documents and personal discussions. Tools such as spreadsheets or simple checklists were commonly used to compare criteria such as price, quality and delivery time. This approach was time-consuming and prone to human error. There was also a lack of transparency and traceability, which made decision-making more difficult and increased risk management.
New: Digital Supplier Relationship Management
Supplier Relationship Management (SRM):
The modern approach relies on digital supplier relationship management, which centralizes and automates the entire supplier selection and evaluation process. With the help of SRM systems, companies can record, analyze and strategically use supplier data in real time. Technologies such as artificial intelligence and big data enable comprehensive analyses of key performance indicators and risk factors. This leads to more objective decisions, speeds up selection processes and promotes long-term, effective partnerships. The integration of sustainability criteria and compliance checks is also easier to implement, which meets the requirements of today's global market.
Practical example: Automotive industry
A leading automotive manufacturer implemented an SRM system to optimize its supplier selection. By digitizing the process, selection times were reduced by 40%. In addition, the error rate in supplier evaluation fell by 25%, resulting in improved product quality and a 15% reduction in procurement costs. The increased transparency enabled the company to proactively identify and minimize risks, which sustainably strengthened the stability of the supply chain.
Conclusion on supplier evaluation
Supplier selection is a complex but crucial process for a company's success. Using systematic evaluation criteria, digital tools and strategic partnerships, companies can optimize their procurement and minimize risks. The trend is clearly moving towards data-driven decisions and sustainable collaboration. Careful supplier selection forms the foundation for stable supply chains and long-term competitive advantages.
