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ONLINE EXCLUSIVE: PURCHASING POWER
Buying Thermal Processing Equipment - Part Four:
Supplier Sourcing and Qualification

March 1, 2004
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In this fourth column in the "Purchasing Power" series, learn how to find suppliers having the specific business strengths and technical expertise you need, which questions should be asked and answered early in supplier discussions, and the appropriate methods to use for supplier qualification.

To this point, you have established and documented the issues that will determine the success of your project. Before you start looking for qualified suppliers, prepare yourself with answers to the following questions:
  • Are all of your needs clearly defined, or does your specification still lack critical details?
  • Are you looking for best available technology, or a more conventional solution?
  • What are the most important contributions we need from our equipment supplier for this project?
  • Do you need budgetary information, or a detailed and firm proposal?
Your answers will aid in the supplier sourcing process. If your specification lacks critical detail, qualified suppliers can often help guide you in finding suitable answers. Some suppliers specialize in developing highly engineered custom solutions, while others provide standard systems from a catalog. Suppliers offer many business strengths, and no two provide the same combination of expertise, value and compatibility with your business needs. And lastly, clarity with suppliers regarding the timing of your project will benefit all involved.

Supplier Sourcing

Today, identifying potential suppliers is both easier and more difficult than ever before. Internet access to online buyers' guides and trade directories can help you quickly develop a list of potential suppliers. However, while guides and directories can help you find suppliers by what they do, you must find out for yourself how well they can meet your specific needs. Also, the sheer volume of potential suppliers can be daunting. By my last count, more than 700 suppliers of process heating equipment exist in the U.S. alone. Some are easy to find, while others are not. The most prominently found suppliers promoting the expertise you need might not be ideal in terms of meeting all of your unique business requirements. So what should you do?

1. Compile a list of supplier information sources. The list may include Ceramic Industry's Data Book and Buyers' Guide, industry trade associations, the Thomas Register, web portals and search engines, industry consultants, etc.

2. Create a short list of the key business strengths you require on this project. The project specification you created earlier should be your guide. Your list should include key technical and performance parameters for the project (all bidders must comply with these requirements), as well as more subjective criteria relating to the way suppliers do business (your business compatibility preferences). This may include aspects related to quality, reliability, process specialization, engineering expertise, testing capabilities, local support, integrity, technical assistance, budget compliance, delivery schedule, etc.

3. Prepare a brief inquiry letter describing the nature of your project and several of your specific requirements. Your answers to the first four questions in this column can serve as a guide. The content of the inquiry letter can serve as a project overview and preliminary screening tool, whether you use it in a telephone conversation, fax or email message.

Armed with this information and your project specification, you are ready to begin contacting potential suppliers. You will inevitably contact companies that are not able to help you. Ask them if they can direct you to other suppliers who may have the expertise you are looking for. Networking with suppliers and industry experts will often reveal resources you would not have discovered on your own.

What is the right number of suppliers to contact? It depends on the nature of the project. But there is one guideline you would do well to remember-few suppliers like to receive proposal requests that are broadcast to dozens of companies. Use your good judgment here, and you are more likely to get a better and more qualified response.

Ultimately you are looking for just one supplier-the one that will meet all of your needs. When you have clearly identified your needs, your will be able to find that one supplier with significantly increased speed and effectiveness. Use your data to qualify prospective suppliers.

Supplier Qualification

There are essentially three stages of the supplier qualification process:

1. Initial screening

2. Intermediate qualification

3. Formal verification

Initial screening is used to identify companies that can most likely meet with your technical and performance requirements. This should take place during your first conversation with prospective suppliers. Sample questions to use during this stage are:

  • Do you have any questions about the inquiry I sent you?
  • Can you tell me about several projects your company has done similar to mine?
  • How does your company differ from your competitors on projects like this?
  • How does your company approach projects like this?
Each of these questions (and more of your own) can provide insight into the understanding and capabilities of prospective suppliers. As they answer questions, you can quickly evaluate their response in light of your technical, performance, and business needs. You will generally want to find three to five companies that pass the initial screening.

Intermediate qualification occurs when you begin receiving proposals and quotations from suppliers. Do suppliers demonstrate an ability to meet with all your needs? You gather information that will be used for making further cuts, or for use in subsequent formal verification. Some general questions to ask suppliers in this stage of the process are:

  • How many projects of this nature has your company done?
  • Can you provide references we can speak with?
  • How does your company ensure the success of projects like this?
  • Who would work on my project at your company?
  • What are the qualifications of your project team?
  • How can you demonstrate your ability to achieve my critical project parameters?
Many other questions will be developed and asked during the period of intermediate qualification. You should ask questions that relate to the specific business strengths you identified as being desirable for this project. For example, if your delivery schedule is critical, you should ask about the supplier's track record for meeting schedules, including the systems they use to ensure the on-time completion of projects. You can request a detailed project schedule, talk to the supplier's project manager and speak with several references.

In this stage, you will also want to get supplier background information, such as approximate revenues of the company, number of employees, facilities and ownership. If you have a large project that is beyond the capacity (but not the appetite) of a supplier, find out early and save yourself a lot of time.

One final note here-take a lot of notes on supplier statements related to the technical, performance and business aspects of your project. You will want to refer to these often, especially when you get to the final supplier selection stage.

Final verification may include site visits, credit checks, demonstration testing and many other forms of verification to ensure that the selected supplier will meet with your needs.

Remember that while you may develop a great relationship with a supplier, you must not simply trust that they will deliver everything as promised. It is your job to conduct an appropriate amount of due diligence in confirming their ability to provide what you require. It is in the best interest of all involved to ensure that your selected supplier is fully qualified, based on appropriate final verification, to meet all of your needs.

Understanding Your Needs

The process of sourcing and qualification can be simple or sophisticated, depending on the nature of your project. Regardless of your project's size or complexity, a clear understanding of your technical, performance and business needs will enable you to source and qualify quickly and effectively. Next month, we will address the evaluation and comparison of supplier proposals and quotations.

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