Supplier analysis: How to carry it out

In the purchasing area, supplier analysis is very useful to determine the conditions and commercial relationships established with the suppliers chosen by a company to source products or inputs that will later be marketed to consumers.

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Understanding these relationships will not only allow you to select the best suppliers but also open the doors to more enduring partnerships between the company and suppliers, which can develop production processes more efficiently. Additionally, they help achieve objectives and meet customer needs.

In this sense, the purpose of this article is to explain what supplier analysis entails, how to conduct it, factors to consider, and the possible common mistakes that may arise.

What are suppliers?

Suppliers can be understood as individuals or entities that provide resources to companies for the production process. These resources can be goods or services, which will be transformed into marketable products. From this perspective, choosing a good supplier will impact a company's productivity, quality, and competitiveness.

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Importance of supplier analysis

Supplier analysis is a valuable tool that allows for research into the types of suppliers that best fit your company's requirements since the supply chain begins with a good supplier, making the selection process crucial.

No company can survive without the inputs provided by suppliers, which is why it is essential to analyze the alternatives available in the market for this category of service. Furthermore, selecting a supplier enables better fulfillment of a company's needs and requirements.

An evident advantage of having suppliers is their influence on the costs and quality of a company's products. However, it is important not to categorize all companies under the same selection criteria, as each company must conduct a supplier analysis for different reasons.

For example, a newly established company may not have suppliers yet, while another company may already have suppliers but wishes to analyze them in order to replace them due to their failure to meet the company's expectations.

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Qualities a good supplier should have

Among the qualities or characteristics that an average supplier should have, we can distinguish the following.

1. Capacity to provide supply.

Every supplier should be capable of offering the appropriate supply of resources that your company requests at the right time. These resources can be inputs, raw materials, spare parts, services, etc.

2. Meeting company requirements.

An ideal supplier should be able to respond to and meet the needs of the company by delivering resources within agreed-upon deadlines. They should also comply with the technical specifications related to the order, according to the company's provisions.

3. Delivery fulfillment.

Furthermore, the selected supplier must fulfill delivery requirements in terms of quality and time to ensure that production begins and ends within specified deadlines. This ensures that the final product is distributed to customers without delay or manufacturing defects.

4. Relevant attention.

The supplier must respect the conditions, agreements, and demands of a specific company, taking into account the operational methods of all their employees and previous suppliers with whom the company has worked efficiently.

5. Effective management.

Lastly, a supplier should effectively manage all processes. This allows for the delivery of quality products on time, as it encourages individuals who can work more productively and focus on the needs of companies.

How to conduct supplier analysis?

Supplier analysis comprises two important stages, which we explain below.

1. Stage: Internal analysis.

The first step to consider is the product or project life cycle. It is important to address relevant aspects related to the orientation of resources and efforts focused on products or services during the initial planning phases.

In this way, the goal is not only to manage suppliers effectively but also efficiently, meaning achieving better results with fewer invested resources. Regarding prospective suppliers, an internal analysis of the needs and expectations of your company should be conducted, and based on that, establish appropriate selection criteria.

For the selection process, it is advisable to ask questions such as: What do we need from suppliers? Why do we need it? How much investment is required to obtain it? When should we acquire it? These questions can assist in making the best choice.

Before finalizing the selection of suppliers, it is important to consider risk analysis, whether it is budgetary or structural, as introducing suppliers to provide inputs that will be transformed into products may pose certain risks for a company.

After completing this step and gathering the necessary information about the supplier candidates to include in the supply chain, it is crucial to differentiate the criteria that will guide the search and selection of the new supplier. In other words, justify why we choose what we choose and what value contributions they can offer.

2. Stage: Onboarding.

In the second stage of supplier analysis, a profile for selecting a candidate who meets the required characteristics has already been established, promoting beneficial feedback.

The next step is the thoughtful selection of the best candidate, and from there, the onboarding process or incorporation of the new supplier into your company begins. This process involves following certain parameters to ensure a positive start to the business relationship with the new supplier.

Next, a suitable communication channel should be defined to facilitate smoother interaction. Additionally, the obligations and duties of the new supplier should be agreed upon based on the previously established role and contract.

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In conclusion, supplier analysis will assist you in the selection process of suppliers to acquire the necessary inputs for your company's production of goods or services. Prior research will provide you with better tools to narrow down candidates that best fit the desired profile.

Over time, the experience gained with the new supplier(s) may lead to more enduring and close relationships, where they not only provide the necessary inputs to keep the production process active but also become strategic partners or allies, joining efforts with your company to achieve common objectives.