Supplier Assessment is a quantitative methodology used to evaluate potential suppliers of Commercial-Off-The-Shelf (COTS) end items. The result of Supplier Assessment is to establish a portfolio of preferred suppliers for use mainly during the proposal process and post-award. Supplier Assessment is also applied to current suppliers to benchmark/monitor performance to evaluate if a provided quotation is a reasonable expectation prior to commencing negotiations. Once established, a ceiling price based on evidence from a data driven expectation becomes an effective tool when negotiating with suppliers. Ultimately, the buyer has a much stronger position for negotiating lower pricing from the suppliers based upon evidence findings from past procurements of like items using the Supplier Assessment methodology.
Implementation of effective Supplier Assessment methodology requires the organization to establish a series of best practices to collect, track, monitor and evaluate supplier data. Over time, this information when collected establishes a rich repository of information that can be mined to find specific relationships or “findings”. These “findings” are then used to establish the ceiling price used in supplier negotiations. Over time, this leads to a quantitative understanding of “preferred suppliers” based on statistical analysis of past data rather than ad-hoc claims.
Once established and combined with predictive cost analytic techniques, Supplier Assessments and selection of preferred suppliers can be quickly conducted on a rational basis. Effective Supplier Assessment requires the establishment of several best practices shown in the table below.
Effective Data Driven Supplier Assessment
The following case studies (Commercial and Aerospace & Defense) illustrate the Supplier Assessment methodology using both TrueFindings and TruePlanning. They outline how TrueFindings provides the capability for data repository, and benchmarking. TruePlanning provides the capability for Technology Normalization and establishing the ceiling price for negotiations. Used together TruePlanning and TrueFindings provide the complete capability for effective supplier assessment and data-driven negotiations.
Download commercial case study and related files on effective data-driven supplier assessment for Hydraulic Pumps.
Download the Aerospace & Defense case study and related files on effective data-driven supplier assessment for Actuators:
Watch how to effectively use Data-Driven Supplier Assessment for Actuators in the webinar recording below:
Download the Supplier Assessment used in the webinar presentation above slide deck: