Choosing Suppliers: Selection and Evaluation

Choosing Suppliers: Selection and Evaluation |Supplier Risk Factors

Supplier risk factors refer to the potential challenges or uncertainties associated with working with a supplier that could negatively impact an organization’s operations. These risks include financial instability, which may affect a supplier’s ability to fulfill orders, and supply chain disruptions caused by events like natural disasters or geopolitical instability. Quality risks arise when suppliers fail to meet required standards, while compliance and regulatory risks involve potential legal issues if a supplier doesn’t adhere to necessary laws. Cybersecurity threats, ethical concerns such as labor practices, and geopolitical instability also present significant risks. Additionally, over-reliance on a single supplier, capacity issues, and poor reputation or reliability can further jeopardize the stability and continuity of the supply chain. Properly evaluating these risk factors is essential to ensure a reliable and resilient supplier relationship.

Mitigating Supplier Risk Factors

Mitigating supplier risk factors involves identifying potential risks in the supply chain and implementing strategies to minimize their impact on business operations. This process includes assessing a supplier’s financial stability, evaluating the quality and reliability of their products or services, ensuring compliance with regulatory standards, and monitoring for any cybersecurity vulnerabilities. By diversifying suppliers, negotiating contracts with contingency plans, and establishing strong communication and monitoring systems, companies can reduce exposure to risks like supply disruptions, unethical practices, and financial instability, ultimately safeguarding business continuity and reputation.

What are the key risk factors to consider when selecting and evaluating suppliers?

When selecting and evaluating suppliers, it is important to consider several key risk factors that could affect the efficiency, reliability, and reputation of the organization’s supply chain. These include the supplier’s financial health, which impacts their ability to meet obligations; quality risks that could lead to defective or non-compliant products; and supply chain risks such as delays or disruptions caused by geopolitical issues or natural disasters. Other factors include compliance with laws and industry regulations, ethical practices, cybersecurity risks, and the supplier’s capacity to meet changing demand. Carefully evaluating these risks helps organizations make informed decisions, ensuring supplier relationships are stable, secure, and aligned with business goals.

Selecting the right suppliers is critical to ensuring quality, reliability, and cost-effectiveness in supply chain management. This course provides a structured approach to identifying, evaluating, and selecting suppliers based on key criteria such as price, quality, delivery performance, and risk management. Participants will gain insights into supplier evaluation techniques, contract negotiations, and long-term supplier relationship management.

Distinguishing between centralised and decentralised procurement, analysing the components and application of total cost of ownership (TCO) principles, conducting a supply market analysis, and identifying the process of selecting and evaluating suppliers are key considerations in effective procurement and supplier management..

Course Content
  • The differences between centralised and decentralised procurement are reflected through a flow diagram of both approaches
  • The advantages/disadvantages of both centralised and decentralised procurement are listed to reflect their impact on supply chain
  • The different circumstances under which to purchase centrally and decentralily are indicated
  • Centralised and decentralised procurement are analysed in relation to their impact on supply chain management.
  • The TCO philosophy and principles are analysed to understand the true cost of doing business with a supplier, going well beyond price
  • Purchasing prices are analysed to reflect its influence on TCO
  • The process of purchasing cost analysis is analysed in order to reflect the cost elements
  • Potential areas of cost inefficiencies are evaluated to determine the effect on the bottom line and where spend can be optimised
  • Cost drivers are analysed to determine their impact on the TCO
  • Process recommendations are made that relate to sourcing in terms of TCO.
  • Supply market conditions are assessed to determine market segmentation that informs the sourcing strategy
  • Company spending is categorised in different supply market conditions
  • A model to do an industry/supply market analysis is used resulting in a sourcing strategy
  • The types of buyer-supplier relationships are evaluated to inform strategies for growing customer value and profitability.
  • The characteristics of a good supplier are assessed to determine their suitability against business needs and buyer specification
  • Sources of information for finding suppliers are determined using a variety of resources including supplier/buyer matching systems
  • A systematic process to select the right supplier is analysed for its capability to deliver against business and market needs
  • Various sourcing policies are evaluated to reflect their influence on the selection of suppliers
  • Various methods are used to evaluate the performance of suppliers
  • Key performance areas are identified for the evaluation of suppliers’ performance
  • Areas of ongoing development of suppliers are identified in order to create value for money and an awareness of the interdependency of the relationship.
  • Non-accredited: Short course only  
  • Duration: 1h 30m
  • Delivery: Classroom/Online/Blended
  • Access Period: 12 Months 
SpecCon Short Course
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