“The Supplier Selection Process”

In your private life you have specific criteria in deciding which companies are in the running for a product you’re considering for your home.  Whether it’s an appliance, a new car or an entertainment unit, specific manufacturers come to mind and research is completed on your end in order to determine the best product for the best value that best fits your needs. 

So how do you determine which companies are on your short list and which one will end up with the sale?  Do you talk to your friends and family and ask about their experiences?  Do you conduct Internet research or buy publications that rate and compare available brands?  Or do you simply shop by price?  Whatever your criteria is, there’s no guarantee that your selection will end up being the right one.  Unforeseen scenarios and internal selection forces could steer you in the wrong direction. 

In the world of Corporate Purchasing, the supplier selection process isn’t much different than your own domestic process.  Buyers discuss supplier performances with their end-users, engineering, quality and financial groups.  Buyers conduct Internet research and study their own internal databases.  And if a Buyer believes there’s no differentiation between supplier products, he or she will most likely make their selection on price alone.  But no matter which supplier a Buyer chooses, there’s no guarantee the right decision was made.  Unexpected circumstances during the course of the project and having other internal department personnel twist the Buyer’s arm can cause them to make the wrong decision.  At the end of the day, Corporate Buyers also want the best product at the best value that best fits their company’s needs. 

In some companies, Purchasing is King; that is, the Buyer is the absolute final decision-maker as to which suppliers will be allowed to quote and which supplier will receive the purchase order.  In that scenario, the engineering and/or the end-user of the product may or may not provide the Buyer an evaluation describing which suppliers meet their requirements.  The Buyer may select the successful supplier based entirely on the commercial evaluations.  Buyers may also be authorized by management to actively purchase products or services on their own to fill a corporate need.     In other companies, supplier selection is a shared decision between the Buyer and other internal departments.  In that scenario, all groups will sit down and review the evaluations and jointly decide which suppliers will be invited to quote and which one will end up with the order.  Sometimes these meetings can become heated depending on how fixed an individual is in sourcing to a specific supplier.  In other companies, the Buyer is simply an administrative puppet, following the lead of others. 

There are obvious positive and negative consequences with each scenario.  But the reality is that there is no perfect way to select the right supplier.  Buyers and/or other departments can define supplier selection processes and guidelines and hope they make the right decision.  Unfortunately, there are times when today’s right decision ends up being tomorrow’s headache: a supplier goes out of business half way through the project; the supplier overestimated it’s technical capabilities and can’t meet project specifications, a sub-supplier is late in delivering essential materials.  Other times the supplier may have done a great job on previous orders, but for whatever reason can’t seem to get it together on the current project.  Maybe it came to the submission of a poor design or inadequate program management so it still ends up being the wrong decision.  And there may be no way for the Buyer or end-user to know that ahead of time.  Even the best of suppliers perform less than perfect at times.  So again, Buyers don’t always make the right decisions and may not always have the command to do so. 

Buyers are human.  They are not perfect.  They can make mistakes despite what they sincerely believe is the right decision.  In a perfect world, there are processes that define the right supplier for the right job.  But we don’t live in a perfect world.  It’s unfortunate that some Sales Professionals attempt to conduct business in the vacuum of a perfect world.  They become incensed when they don’t get the purchase order despite the fact they were the best supplier for the job.  Unfortunately, we don’t live in a fair and just society.  We don’t work in a fair and just business environment.  And as a Sales Professional, you can either accept this fact and attempt to prudently improve conditions, or you can distance yourself from the decision-makers by complaining about how things should be. 

In the real world, there are internal and external forces that directly or indirectly affect the supplier selection process.  Those internal and external forces include politics, ignorance, stupidity, ego, supplier discrimination, the good ol’ boy network, and the “We’ve always done it this way” mentality.  Because of these forces, many orders have been lost to the wrong supplier for the wrong reason.  And because of these forces there are times when the Buyer’s hands are tied during the supplier selection process.  For instance, a Production Manager may fight for his favorite supplier to receive the order even though another acceptable supplier’s quote is priced significantly lower.  In a Buyer vs. Production Manager wrestling match the higher grade-level usually wins, depending on how far Purchasing Senior Management wants to take it. 

So how do you digest the information given here and develop sales strategies to improve your opportunities?  STEP ONE is to find out how the Client’s supplier selection process is accomplished.  Prudently ask which departments and which individuals in those departments are involved in selecting suppliers.  That way you’ll know who is directly involved in deciding what suppliers get to quote and who you should be contacting that you may not already be in front of.  “Are you able to discuss the supplier selection process on a general sense?  I can imagine there must be several departments involved.”

STEP TWO is to get in front of each person or department that’s involved and sell to them based on what’s important to their own individual needs.  My Blog titled “The #1 Sales Meeting Mistake” instructs the reader to NOT use the same generic sales presentation on every department.  Instead, your sales presentation should be tailor-made to every department and/or individual based on their roles, responsibilities, yearly goals and project interests.  As an example, don’t spend your entire presentation on your technical capabilities when you’re meeting with the Buyer, and don’t get into detailed commercial information if you’re meeting with engineering.

Of course the best way to continue being on the short list of suppliers is to follow through with your own criteria that you have when deciding which companies are in the running for a product or service in your own home:  Has the product worked in the past?  Was the price fair and reasonable?  Was it delivered to your home on time?  Was it installed properly or were the directions confusing?  Did it require maintenance during the warranty period and, if so, was service immediate and based on your availability?  Would you recommend the product to others?  These are some of the same standards and principles Corporate Buyers look for when deciding who will be requested to quote, who will receive the order and who will be left off the short list.

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