Five Steps to Successful Vendor Selection Successful Vendor Selection

The vendor selection process can be daunting, especially if the goods or services are unfamiliar or technical.  Following these steps will help to ensure a successful outcome.

1. Analyze the organization's business requirements:

• Assemble an evaluation team including end users
• Define the product, material or service
• Define and prioritize the technical and business requirements
• Define the vendor requirements
• Publish a requirements document for approval

2. Perform a vendor search:

• Compile a list of possible vendors
• Select vendors from which to request information
• Write a Request for Information (RFI)
• Evaluate responses and create a "short list" of vendors

3. Prepare Requests for Proposals and Requests for Quotations:

Submission Details:

• Introduction and executive summary
• Business overview
• Background
• Detailed cpecifications
• Assumptions and constraints
• Terms and conditions
• Selection criteria

4. Evaluate the proposals and select a vendor:

• Perform a preliminary review of all vendor proposals
• Record business requirements and vendor requirements
• Assign  an importance value for each requirement
• Calculate a total performance score
• Select the winning vendor

5. Negotiate a contract:

• List rank your priorities along with alternatives
• Know the difference between needs versus wants
• Know your BATNA (best alternative to a negotiated agreement)
• Define any time constraints and benchmarks
• Assess potential liabilities and risks
• Define confidentiality and/or non-compete requirements
• Plan for any future dispute resolution
• Assess all of these from the perspective of the vendor (i.e. walk a mile in their shoes)

Adapted from "The Successful Vendor Selection Process" on about.com: http://bit.ly/c12HI5