3. Determine Sourcing Options

When the purchaser is presented with a need and a specification, he/she must determine the most qualified source (supplier or vendor) to provide the material or service.

Approved Supplier List

In most instances, the purchasing department maintains a list of approved suppliers which would be qualified to supply materials or services. The qualified source lists is a good place to start as both organizations know what to expect from each other.

When an approved supplier list is not available the purchaser needs to begin a search to find a supplier and then qualify them.

Search

  • The buyer will search past and present purchase orders and contracts.
  • The buyer will conduct research using trade journals, industry magazines, sales representatives, other purchasing professionals and many other sources.

Qualifying

Each supplier goes through a qualifying process to make sure that it can perform as required with the right product, at the right time, in the right quality, in the right quantity, for the right cost. Qualifying suppliers includes verifying financial stability, product performance, references and reputation, past delivery performance and many other criteria.

 An organization cannot provide its ultimate customers with better quality goods and services than it receives from its suppliers. If a supplier is late with a delivery or has quality problems the quality and availability of the product or service to the customer will be affected unless the firm carries higher inventory. Purchasers must understand the needs of the customer in order to make the right decisions to meet the organization's needs.