Picking the cheapest bid is easy, but it's often wrong. Most buyers compare suppliers with a weighted scorecard: a list of criteria, each with a weight that says how much it matters, and a score for each supplier against each one.
Typical criteria are price (or total cost), quality, delivery reliability, capacity, service and financial strength, with sustainability and risk now common too. The weights should be agreed before the bids are opened, so nobody bends them to suit a favourite.
Say price is worth 40%, quality 30%, delivery 20% and service 10%, and each is scored out of 10. Supplier A scores 8, 7, 9 and 6. Its weighted score is 8 × 0.4 + 7 × 0.3 + 9 × 0.2 + 6 × 0.1 = 3.2 + 2.1 + 1.8 + 0.6 = 7.7 out of 10. Do the same for every supplier, and the highest total wins.
Before you rely on a new supplier, check it. That's supplier qualification: financial accounts (will they still be here next year?), quality certificates such as ISO 9001, a visit or audit of the site, references from other customers, and samples or a trial order. For critical parts it can take months.
Once a supplier is chosen, the scoring doesn't stop. Supplier performance is tracked against KPIs (on-time delivery, defect rate, response time) and reviewed regularly. A good supplier relationship is worth investing in; a poor one gets an improvement plan, and in the end gets replaced.
Weights: price 40%, quality 30%, delivery 20%, service 10%. Supplier B scores 6, 9, 8 and 9. What's its weighted score out of 10?
| Weighted scorecard | Criteria × weights, summed for each supplier. |
|---|---|
| Qualification | Checking a supplier before you rely on it. |
| ISO 9001 | A common quality management certificate. |
| KPI | A number you track performance with. |
| Supplier review | Regular look at KPIs with the supplier. |