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The Optimal Supplier

12. The Optimal Supplier. The Initial Supplier Survey. List all possible suppliers Trim list by establishing a set of criteria Product Lists AP prices Supplier services Location Lead times Purchasing policies. Buying Plans. Working with one supplier Bid Buying.

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The Optimal Supplier

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  1. 12 The Optimal Supplier

  2. The Initial Supplier Survey • List all possible suppliers • Trim list by establishing a set of criteria • Product Lists • AP prices • Supplier services • Location • Lead times • Purchasing policies

  3. Buying Plans • Working with one supplier • Bid Buying

  4. The Fixed Bid Vs. The Daily Bid • Fixed bid • Used for large quantities of products purchased over a long period of time • Typically a formal procedure • Request for bid includes specs for bidding process • Daily bid • Used for fresh items • Called “daily quote buying”

  5. Selecting a Supplier When Using Bid-Buying • Fixed Bid • Distribute bid requests to potential suppliers • Determine what supplier provides you with the optimal value for a product or a set of products • Daily bid • Review bid sheets • Determine what supplier provides you with the optimal value

  6. Other Supplier Selection Criteria • Cost-plus purchasing • One-stop shopping • Stockless purchasing • Cash-and-carry • Standing orders • Use of technology • Co-op purchasing • Local or national source

  7. Other Supplier Selection Criteria (cont.) • Delivery schedule • Ordering procedures • Credit terms • Minimum order requirements • Variety of merchandise

  8. Other Supplier Selection Criteria (cont.) • Lead time • Free samples • Returns policy • Reciprocal buying • Willingness to barter

  9. Other Supplier Selection Criteria (cont.) • Cooperation in bid procedures • Size of firm • Number of back orders • Substitution capability • Buyout policy

  10. Other Supplier Selection Criteria (cont.) • Suppliers facilities • Long-term contracts • Case price • Bonded suppliers • Consulting services • Deposits required

  11. Other Supplier Selection Criteria (cont.) • Willingness to sell storage • Suppliers who own hospitality operations • Socially responsible suppliers • references

  12. Most Important Selection Criteria • Individual buyer preference • Product quality usually number one • Supplier service is a close second • AP price is usually third

  13. Supplier-Buyer Relations • Supply house officers set the tone of their business • They set the overall sales strategies • They sponsor product and market research • Suppliers train their sales staffs • Suppliers keep their salespersons’ promises

  14. Suppliers’ Major Activities • Set tone of business • Determine sales strategies • Push • Pull • Product and market research • Sales training

  15. Additional Considerations • Determine how you will work with salespersons or distributor sales representatives (DSRs) • Evaluate suppliers and salespersons • Get comfortable in the relationship

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