Learning/Research Content

Is Your Supplier Selection Process a Source of Competitive Disadvantage?

Some of this may seem pretty obvious to the experienced amongst you. Yet we still regularly see organizations making what we’d consider obvious mistakes in their pre-qualification processes. For instance, arbitrary rules are applied, which eliminate bidders based on their revenues. So buyers decide that if the contract value is $5 million per year, a supplier needs an annual turnover of perhaps three times this value ($15 million) in order to qualify to bid. The question of course is “why?” If we are talking about manufactured goods, then it is right and proper to examine the potential supplier’s capacity. If their current facility is running flat out, what would be the implications of awarding them this contract?