Last edited 29 Mar 2017

Supplier selection

[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:

Consultancy services such as design and project management.
Enabling and demolition works.
The main construction contract works.
Specialist sub-contract works.
The supply of plant.
The supply of products and materials.
Maintenance and operation services.

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.