Last edited 29 Mar 2017

Supplier selection

See also: Tender process.


[edit] Introduction

In the construction industry, ‘supplier’ is a very general term which refers to organisations contracted as part of the delivery of a built asset.

Critical steps in the supplier evaluation and selection process are:

  • Recognising the need for a supplier.
  • Determining the criteria for supplier selection.
  • Identifying potential suppliers.
  • Shortlisting suppliers.
  • Evaluating and selecting the supplier.
  • Contracting the selected supplier.

[edit] The need for a supplier

Suppliers might be need for a wide range of purposes, including:

Potential suppliers might be identified by research, advertising, recommendation, open competition (with or without design), selective competition (with or without design), or through an existing relationship such as a framework agreement.

[edit] Selection criteria

Some of the most common criteria that are used to select suppliers are set out below:

  • Process and design capabilities: The supplier should have relevant previous experience, and should have the capability to supply as required.
  • Quality: The product/service should be of a sufficient quality or meet the required specification.
  • Cost: Total supplier costs should be assessed, including the product/service cost, ordering cost, logistics costs, lifecycle costs, delivery charges, and so on.
  • Service: The ability of the supplier to provide an appropriate level of service, such as technical support post-purchase. What value added does the supplier offer?
  • Capacity: The ability of the supplier to meet the requirements in accordance with the required delivery schedule.
  • Location: The geographical location of a supplier may affect the delivery lead-time, transport and logistics costs, availability of support and so on.
  • Management capability: The supplier’s track record on continuous improvement of their processes and standards, and their ability to maintain good relationships with their clients.
  • Financial stability: Will they continue to be a reliable source of supply or are a risk to the project?
  • Ordering system: The robustness and sophistication of the ordering system can impact on supply chain performance, and should be as easy and efficient as possible, with short delivery lead times.
  • Compliance: Whether the supplier is fully compliant with environmental regulations, health and safety requirements, quality assurance standards and so on.
  • Longer-term relationship: Whether they have the potential of being a long-term partner, with a willingness to share technologies and information in a mutually beneficial manner.
  • Innovation: Is the supplier able to offer innovative products or services that would bring added value to the project?
  • Proposed methodology: This might include mobilisation plans, design proposals, and non-compliant proposals if these have been allowed.

See also: Tender evaluation.

[edit] Selection methods

Some of the methods that can be used as a means of determining how a supplier fits the criteria listed above include the following:

For more information see: Tender process and tender evaluation.

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