Principle’s of Customer and Supplier

5 Steps to Supplier Selection

Companies failing due to their
supplier selection process?
• Step 1 – Supplier Selection Scorecard
o Supplier Characteristics
• Step 2 – Identify Suitable Suppliers
• Step 3 – Scorecard Ranking
• Step 4 – Negotiate
• Step 5 – Create Contract
Principle’s of Customer and Supplier
Single Sourcing Advantages
1. Better pricing through higher
volumes
2. Inventory and Scheduling
3. Quality Improvement
4. Build long term relationship:
5. Price escalation
Disadvantages
6. Default Risk:
• reasons-fire, strike, natural
disaster, vendor prerogative,  
Principle’s of Customer and Supplier
Multi-Sourcing
1. A larger group of vendors can
reduce the risk of supply shocks
2. Multi-sourcing allows you to
monitor which suppliers perform
best
3. competitive pricing among
vendors.
Electronic
procurement
1. Enterprise Resource Planning (ERP)
2. Electronic Data Exchange (EDI)
3. History of E-purchasing and
Purchasing
4. Constituents of E-procurement
• Indent Management
• E-invoicing
• E-payment
• Contract Management