Step One of Vendor Selection: How to Analyze Business Requirements

The first step in choosing a vendor is analyzing your business requirements.

1. Assemble an evaluation team.  This team must include representative stakeholders who will be impacted by the final choice of the vendor for the product, material, or service. Commodity councils, staffed by volunteer employees, are an invaluable method for gathering end-user input.  The size of the evaluation team should range from three to no more than ten participants.
2. Define the product, material, or service. This may be a single line or paragraph from a bill of materials, and it may contain specifications.  It's important to keep "wants" separate from "must haves".
3. Define the technical and business requirements.  Technical requirements can be obtained from the bill of materials or from engineering drawings or manufacturing procedures. Business requirements should include not only required features, but specific minimum quality standards.  The more detail in the requirements, the more likely the outcome will be satisfactory.
4. Define the vendor requirements. It is important to list the criteria the vendor must have.  This can include but is not limited to size, market capitalization, availability of references, domestic origin of raw materials and location.
5. Publish a requirements document for approval.  It is important to aggregate all the information collected in the previous steps,so that members of the evaluation team can provide feedback and ultimately approval.  It can then be sent to senior management for final approval.  This document will become the basis for generating a Request for Proposal (RFP) or Request for Quote (RFQ).

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