Standard Operating Procedures for Vendor Evaluation

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No matter what line of business you are in, choosing the right vendors is an important part of your success. Choosing top quality vendors who are willing to work with your company can help your business thrive. But selecting the wrong vendor can cost your company a lot of money while damaging its reputation for quality. That is why it is so important for company managers to have a solid vendor evaluation, testing and selection process in place.

Look Beyond Price

One of the most common mistakes businesses make when evaluating vendors is becoming too focused on price and price alone. While a low price is certainly an important goal, it is not the only one. It is just as important that the chosen vendor be able to perform at the highest levels and provide the highest quality in support after the sale. It is important to factor in not only price but also quality and service as well.

Create Shortlist

One of the most important parts of the vendor selection process is narrowing the field of potential vendors to a short list of qualified candidates. When dealing with software purchases it is important to work only with vendors who have been certified by the appropriate licensing body. This will help to ensure that only the most qualified vendors are invited to submit proposals. After you have created your short list of possible vendors, you can work to narrow the field further by comparing the proposals you receive.

Evaluate Both Up-Front and Ongoing Costs

When examining the vendor proposals your company receives, it is important for the management team to look at initial up-front costs and the ongoing costs of ownership for each solution you are considering. For instance a proprietary system may seem less expensive initially, but the limited number of vendors who can provide support may make it more costly in the long run. When evaluating vendor proposals it is important to get the input of the entire management team, including not only team members from purchasing but those from IT and business management as well. This will help to ensure that all angles have been examined and that the chosen vendor is truly the best fit for the project at hand.

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