PurchTips - Edition # 209

 

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8 Supplier Selection Criteria & The SHoCC

By Charles Dominick, SPSM, SPSM2, SPSM3

How Do You Prioritize Supplier Selection Criteria?

You should use a Sourcing Hierarchy of Constraints & Criteria (SHoCC) for every major sourcing process you lead. I'll explain the SHoCC by defining its components.

Criteria are attributes that a buying organization values in its arrangements with suppliers. There are eight common supplier selection criteria, in no formal order:

  1. Cost
  2. Quality & Safety
  3. Delivery
  4. Service
  5. Social Responsibility
  6. Convenience/Simplicity
  7. Risk
  8. Agility

Depending on the situation, you may use them as-is, use more or fewer, or use a different combination of eight.

Often, sourcing team members will want some criteria to be treated as constraints - unbreakable rules in the supplier selection process. Examples of constraints include: there can only be one supplier, we must select the low bidder, delivery must be within six weeks, etc.

Your job as leader of the sourcing team is to determine whether the proposed constraint is a truly warranted constraint or simply an important criterion. You can do so by asking questions like "If we had to choose between (a) having the best quality for all items by using two suppliers and (b) having the best quality for only half the items by using one supplier, would we still insist on using one supplier?" or "If we could save 34% by accepting a seven week lead time instead, would we choose to save the money or would we still need to insist on the six week lead time?" The fewer constraints, the more flexibility the team has in its decision-making.

After agreeing on the constraints and criteria, the sourcing team must agree on a hierarchy - an order of these attributes from most important to least important, with constraints preceding criteria. In most cases, supplier offerings will differ and there will be tradeoffs involving the criteria: you may get a better price from one supplier (cost) but that supplier insists on contract terms less favorable to you (risk). Creating a SHoCC in advance will help your sourcing team remain focused on what's most important to make a balanced decision.

To learn more about supplier selection methods and to master the 7 critical steps of supplier selection, consider the online Express Course "7 Critical Steps of Effective Supplier Selection." Learn more by clicking here.

(keep reading for a FREE Offer)

Spotlight On Professional Development Opportunities

SPSM Certification

Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.

You see, today's employers refuse to reward employees for yesterday's skills.They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.

Is lacking a purchasing certification keeping you from getting the results, opportunities, respect, and money that you want out of your career? Today's employers refuse to reward employees for yesterday's skills. They want you to save more money, achieve better operational performance, and reduce risk. They demand that purchasing professionals like you achieve unprecedented results and without the most modern skills that can be a challenging feat!

So how can you acquire the most modern skills, achieve meaningful results, and convincingly prove your capabilities to today's employers? There is an impressive purchasing certification program that will teach you what you need to accomplish all of this and more. It is the SPSM® Certification, earned by completing the Senior Professional in Supply Management® Program. And you could earn it in less than a year - maybe even much less than a year!

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) (with the option of getting a Study Guide on an iPad) at:

Distinguishing yourself as an achiever in purchasing is key to sustaining a rewarding career, even in these difficult economic times. Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) at:

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices  into your organization and achieve your career potential. And if you sign up for the Senior Professional in Supply Management® Program on or before May 31, 2008, SPSMSM Certification Program on or before 4/30/2007, you also get these and other bonuses valued at over $700:

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To learn how to earn your SPSM® Certification and get these valuable bonuses, visit:

Earning your Senior Professional in Supply Management® (SPSM) Certification is the action to takeif you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSMSM Certification at:

Learn how to earn your SPSM® Certification at:

www.NextLevelPurchasing.com/spsm.html

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