Supplier Selection
The Process of
Supplier Selection
1 Introduction
In today’s competitive society more and more businesses are realizing the impact purchasing has on their profit (van Weele, 2005:XV). According to van Weele (2005:4) “most companies today spend more than half of their sales turnover on purchased parts and services”. As this is a shocking amount, it is not surprising companies have special purchasing departments to handle this crucial and often complicated process. One of the most important and challenging steps of the purchasing process is the selection of suppliers. Therefore there are lots of studies and literature dealing with finding the right supplier for your distinctive products/services and needs.
1.1 The problem field
The biggest problem is finding the right supplier for your need. If you don’t find the optimal solution it can cost the company competitive advantages and money. There are many problems in the process and questions like how many suppliers the company should use, where they should be located and what quantities should be ordered are some of the most relevant ones. The problem affects every company in the entire world as there isn’t a company who does everything themselves. Some products or services are outsourced and to be effective and competitive you need to find the most optimal solution.
1.2 Purpose
The purpose of this paper is to learn how companies choose their suppliers. Which are the criteria? What determines if they choose an old or a new one? We decided to examine this through an interview with Toni Collin, CEO of the Finnish department at the clothing company Carlings, to find out how their suppliers are chosen. He has almost a decade of experience in the company and was also present at the establishment of the company in Finland. We have also done some research in this area to be able to compare if the process at Carling is consistent with theory. The interview with Toni Collin was done on September 25th 2009 by phone at
Supplier Selection
1 Introduction
In today’s competitive society more and more businesses are realizing the impact purchasing has on their profit (van Weele, 2005:XV). According to van Weele (2005:4) “most companies today spend more than half of their sales turnover on purchased parts and services”. As this is a shocking amount, it is not surprising companies have special purchasing departments to handle this crucial and often complicated process. One of the most important and challenging steps of the purchasing process is the selection of suppliers. Therefore there are lots of studies and literature dealing with finding the right supplier for your distinctive products/services and needs.
1.1 The problem field
The biggest problem is finding the right supplier for your need. If you don’t find the optimal solution it can cost the company competitive advantages and money. There are many problems in the process and questions like how many suppliers the company should use, where they should be located and what quantities should be ordered are some of the most relevant ones. The problem affects every company in the entire world as there isn’t a company who does everything themselves. Some products or services are outsourced and to be effective and competitive you need to find the most optimal solution.
1.2 Purpose
The purpose of this paper is to learn how companies choose their suppliers. Which are the criteria? What determines if they choose an old or a new one? We decided to examine this through an interview with Toni Collin, CEO of the Finnish department at the clothing company Carlings, to find out how their suppliers are chosen. He has almost a decade of experience in the company and was also present at the establishment of the company in Finland. We have also done some research in this area to be able to compare if the process at Carling is consistent with theory. The interview with Toni Collin was done on September 25th 2009 by phone at