Comprehensive Guide to Vendor-Supplier Selection Process for Companies (Full Transcript)

Speaker 1: Hello everyone, in this video we will cover about vendor-supplier selection process If any company wants to select a vendor or supplier, then what is its process? Apart from this, in the book series of Production and Operation Management, the topics related to purchase management are given in sequence here and the link of the whole series is available in the description of the video. You can check it. So these are the six steps of vendor and supplier selection process which we will discuss in detail. First of all is quality. Delivering quality goods to the customer is the key to capturing the market and to win the confidence of the customers. So as we all know that quality matters a lot in today's time. If you like any product more in terms of quality, then you buy it again and again and even refer it to your neighbours and friends. So if any company produces a quality product for its customers, it can capture the market and win the confidence of the customers. The target of quality goods means if any company wants to produce quality goods, then it depends on the quality of the material which is supplied by the supplier. So if the company wants to keep the quality of its final product good, then it has to buy good quality material from the supplier. So the management has to select such vendors which provide better quality material. Second is price. The price of material is a very important factor which affects the supplier selection criteria. But here the value of money matters more. What does it mean? It means that a cheap supplier may sell low quality material and a costly supplier may supply good quality material. Therefore, the supplier who sells a good quality product at a reasonable price should be selected. So what I mean to explain here is that we discussed in the previous point that quality is one factor which depends on the second price. Now it may be that the company thinks that we pick up the goods at a low price, but it may be of low quality. So the company will also have to keep in mind that when they are selecting the price, which price to buy, then it should be a reasonable price on which good quality material can be available. Third is financial health. If the supplier is not financially sound, then it cannot become a reliable source for the organization. And how is that? The reason for this is that the supplier also needs funds to acquire and prepare the material and to do day-to-day operations. So suppose if the supplier does not have enough money to run his day-to-day work properly, to prepare the material, then how can he provide you with quality material at the right time? So it may be that your cost will increase, the material will be late, the production will be late, the market will be late, you will not be able to meet customer satisfaction. So it will also have to be seen that the supplier should be financially sound. Fourth is past performance record. The organization should carefully examine the past performance records of the vendor. If the vendor has maintained a good relationship with his clients and has maintained a level of quality over the year, then it is a good investment to do business with that vendor. So if the vendor has a good relationship with his clients, his quality has been good for 10 years, any kind of business, any kind of negative feedback has not been received regarding that vendor, then it is a good deal, the company can go with that business. Fifth is mode of payment. The organization should consider such a supplier who has a different payment method system. So there are many types of digital modes of payment here, such as debit card and credit card, cheque, cash, internet banking, mobile banking, PayPal, etc. So the more sources or the more methods he has of payment, the better. So that the company is more convenient than the method, he can easily pay with that method. Sixth and last is miscellaneous factors. In addition to all the above factors, means all the factors we have discussed, apart from that, some other factors should also be taken into account or consideration. Like culture, values, expert management, type of technology used by the supplier, terms and condition, transportation facility, after sales services, etc. So the more services the supplier will provide, the better it will be for the company. So these were some points of vendor and supplier selection process. So let's quickly sum them up again. Suppose if you want to make someone your friend, then you see some points in it, that he should be caring, help you where you need, support you, guide you. So in the same way, a company also takes some points into consideration during the selection process of vendor and supplier. For example, supplier should provide him with good quality material, charge a reasonable price, be financially sound, so that he can also run his day-to-day operations well, his past record should be good, all his old clients, he should get positive reviews or feedback from all of them. Mode of payment. He should have different modes of payment method, so that the company can make the payment according to the convenient method. Miscellaneous factors, other factors, like after sales services, flexible terms and conditions, transportation facility, some other points, which should be taken into consideration. How was the video? Do tell me by commenting. And if you have any query regarding any topic, then you can comment for me. I will reply to you there or make a separate video on it and share it with you. For similar updates, subscribe to the student notes channel, like and share the video. Thank you.