There’s no argument that selecting the right supplier for your contract is the most important part of the procurement process. It’s the whole point of the procurement process. Buyers must be 100% certain that the suppliers they choose are completely reliable and more than capable of delivering the contract.
Now, absolutely perfect suppliers don’t exist, but some are a good fit for your needs as a public sector contracting authority. They’re the ones who are honest about their challenges, but provide contingency plans for potential bumps in the road. They’re the ones that might not have the lowest price, but which make up for it in excellent added value.
They’re the ones with the certifications that demonstrate they meet international standards for quality, data protection, and sustainability.
Just how do you choose suppliers who tick all these boxes? We’re going to provide some top tips to help you evaluate and select the best supplier for your contract.
Understanding the Procurement Process
In the context of supplier selection, understanding the procurement process is essential to ensure that the right suppliers are chosen to meet the organisation’s needs. This involves identifying the organisation’s requirements, evaluating potential suppliers, and selecting the most suitable ones based on quality, price, and reliability. Public sector buyers can make informed decisions that align with their strategic objectives and deliver optimal value by mastering the procurement process.
Key Supplier Selection Criteria
There are two ways in which buyers can choose suppliers: From open competitive procedures or restricted procedures with Approved Supplier Lists (ASLs). The selection and evaluation processes for both types of procurement are much the same.
Before buyers drop any hint of a new contract, they must set very clear criteria and standards. This helps evaluators because they know exactly what they must assess and helps suppliers because they know exactly what they must provide. Suppliers make a bid/no-bid decision and already you’ve narrowed your list of most likely candidates.
What Are Your Criteria?
Obviously, the exact criteria (or key performance areas) you set will depend on your specific needs, but they typically include:
- Quality
- Price
- Delivery
- Flexibility
- Reliability
- Responsiveness
- Ethical practices
- Financial stability
- Past performance
- Compliance with the Procurement Act 2023
- Compliance with other internal and external regulations
- Certifications
This is the basis for your scorecard, so you should write a list of criteria in order of importance. For example, this contract relies on manufacturing processes. You might prioritise quality, past performance, delivery, and compliance.
Then you need to add weight – so, you’re giving your priorities value, Quality might be 40%, past performance 30%, delivery 20%, and compliance 10%.
Wait!
Don’t forget about social value. The Procurement Act 2023 gives social value a minimum weight of 10%.
Now your values could be, quality 40%, past performance 25%, delivery 15%, compliance 10%, and social value 10%.
Your potential suppliers must know your priorities and their weight, so they know how to tailor their proposals. Your evaluators must also know, so they can properly score the responses.
Identifying Potential Suppliers
Identifying potential suppliers involves researching and evaluating candidates to determine their suitability to meet the organisation’s needs. It’s essential to consider factors such as their reputation, experience, and capabilities. This narrows down the list of potential suppliers and ensures that only the most suitable suppliers remain. In this way, procurement managers can build a robust pool of candidates that meet their specific requirements.
Social Value in the Selection Process
This is it! The big issue that enables SMEs to compete fairly against the big boys in public sector procurement. We’ve said that it has a minimum weight of 10%, but how do you measure what goes into that 10%?
There isn’t really a standardised measurement method. The Social Value Model is a qualitative evaluation and doesn’t provide any numbers for actionable processes.
However, the TOMs system is widely accepted as the most legitimate measurement tool. TOMs (Themes, Outcomes, and Measures) are designed to measure social value according to the themes in the Social Value Act and the Social Value Model.
When used correctly, TOMs clarify what buyers are looking for in social value initiatives, while enabling buyers to measure the effectiveness of social value delivery.
eSourcing Tools Streamline Supplier Evaluation
eSourcing tools typically provide many features and services related to the procurement process. Platforms, like Delta eSourcing, may include Tender Management services which includes a supplier evaluation tool.
These enable you to create a customised evaluation plan that includes flexible scoring and percentage weightings. You can also send and receive RFIs and ITT documents through a secure portal.
Delta eSourcing is also EU-compliant, an important feature if you’re going to extend your procurement processes across borders.
Managing Risks and Ensuring Quality
Managing risks and ensuring quality involves evaluating potential suppliers to see if they can meet the quality and risk management requirements. This includes:
- Audits and assessments
- Reviewing quality control measures
- Evaluating risk management processes
- Assessing financial stability and creditworthiness
- Reviewing customer references
This reduces the likelihood of supply chain disruptions, improves customer satisfaction, and protects their reputation, not to mention your supply chain.
Getting Down to the Selection Process
Whether you’re sending an RFI or PQQ to a potential supplier, you’re looking for the same kind of information.
- Company details: Address and contacts
- Financial records: Annual turnover, total assets, insurance cover – anything that proves financial stability.
- Policies & procedures: Adherence to health and safety, environmental, and equality policies and regulations.
- Performance: Evidence of previous successful projects, like case studies and testimonials. The important thing is for suppliers to prove they have a good track record in similar projects.
- Mandatory and Discretionary Exclusions: A declaration of exclusions
Compliance gets a section all on its own – it’s quite important.
There are strict regulations and legislation governing public procurement. Suppliers must comply with the regulations and obtain certifications to meet set standards.
For example:
Certifications: ISO standards. The International Organisation for Standardisation sets standards for quality management, data protection, environmental sustainability, etc.
Accreditations: Industry and sector-specific accreditations. We recommend you take a look at UKAS (United Kingdom Accreditation Service), which is the UK’s National Accreditation Body. It provides a list of accredited organisations; for example, the British Assessment Bureau, Security Systems and Alarms Inspection Board, and the British Institute of Non-Destructive Testing.
Best Practices for Supplier Selection
There are several steps buyers can take to ensure they choose the right suppliers to meet their needs. These include:
- Developing clear selection criteria
- Evaluating potential suppliers based on their capabilities, experience, and reputation
- Conducting thorough research
- Assessing potential suppliers’ quality control measures
- Evaluating risk management processes
- Considering factors such as price, delivery, and customer service
This way, buyers can choose suppliers that meet their needs, reduce costs, and improve efficiency.
Common Mistakes to Avoid in Supplier Selection
Buyers should avoid these mistakes when selecting suppliers:
- Not developing clear selection criteria
- Not basing decisions on suppliers’ capabilities, experience, and reputation
- Not assessing quality control measures and certifications
- Focusing too much on price and no other factors such as delivery and customer service
Avoiding these mistakes ensures that contracting authorities make well-informed decisions that align with their strategic goals and customer demands.
Post-Selection Priorities
Once suppliers have been chosen, the contract begins, but that’s not really the end of the supplier selection process. There’s one more thing that needs to be taken care of and that is nurturing supplier relationships.
You don’t really want to put in a lot of time and effort to choose the perfect supplier and then take the day off to go fishing. The time investment must also bear fruit and that’s when you start to develop good working partnerships with certain suppliers. Partnerships should be nurtured and helped to become mutually beneficial because this is where true value lies; a partnership where both parties can rely on one another to work for the best possible outcome and not the best outcome for them.
Post-selection engagement is also how you ensure that your priorities remain aligned and that you’re always, more or less, on the same page when it comes to contract fulfilment and public satisfaction.
If you want to find out more about supplier evaluation and selection, contact Delta eSourcing for a free demo and see how we can help you choose suppliers that will drive your projects onwards and upwards.
