Supplier selection and negotiation

The same can be said for the procurement and supply function which places the greatest emphasis on those operational effectiveness business activities associated with performance management (28.75%), process enhancement (27.62), IT and Internet solutions (22.79%). The function also puts considerable effort into its key functional role and responsibility associated with supplier selection and negotiation (22.60%), supplier development (19.11%) and segmentation of spend (11.62%) activities. The function clearly understands that it must deliver external resources efficiently and effectively at the operational level. This is borne out by the fact that it devotes least effort to the more strategic make/buy (9.20%) business activities. 

Supplier selection and purchasing. This deals with procurement of materials and services that are needed from suppliers to satisfy customer demand. The problem includes such issues as identification of materials and services needed, supplier relationships (i.e., supplier selection, contract negotiation, supplier evaluation) and execution of procurement operations. 

Capital equipment aftermarket parts distributor All markets and customers All products supported Sourcing group responsible for selection and business arrangement negotiation with suppliers for high-value commodity groups, supplier certification, and supplier performance measurement... 

Strategic items Develop supplier relationships and partnerships, switching suppliers is difficult, increase role of selected supplier, strive for effectiveness, supply continuity, and technical expertise is more important than price, prepare contingency plans, and requires a great deal of negotiation. 

In crafting the RFP, clearly state your assumptions about volumes of business to be awarded, service levels, etc. explain the selection process and criteria and outline how you intend to measure both your and the supplier s compliance with the terms of the contract. Point out the potential increase in business that winning the contract would mean. Send out the RFP and then make your preliminary decision based on your preestablished criteria and use your best negotiating skills to come up with a final choice. 

Where uncertainties arise out of future procurement decisions, changing the procurement policy. For example, by negotiation with a selected supplier rather than competitive purchase, or, less radically, by specification of design features which otherwise would be determined by competition. The cost and commercial implications obviously have to be evaluated. 

The key factors that can influence the decision-making process are product specihcation, production capacity, quality, cost and time. Based on the product specihcation, the buyer will determine which product will be purchased, will select the supplier and will negotiate on the delivery terms and price. The production capacity, sales forecasting, preseason style testing, sampling, merchandise line planning and development will ultimately govern the overall procurement process. 

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