How to Assess Procurement Value

𝐑𝐞𝐟𝐥𝐞𝐜𝐭𝐢𝐧𝐠 𝐨𝐧 𝐚𝐥𝐥 𝐭𝐡𝐞 𝐬𝐮𝐩𝐩𝐥𝐢𝐞𝐫𝐬 𝐈’𝐯𝐞 𝐬𝐨𝐮𝐫𝐜𝐞𝐝, 𝐨𝐧𝐞 𝐭𝐡𝐢𝐧𝐠 𝐢𝐬 𝐜𝐥𝐞𝐚𝐫: 𝐩𝐫𝐨𝐜𝐞𝐬𝐬 𝐦𝐚𝐭𝐭𝐞𝐫𝐬. Taking shortcuts can lead to wasted money and a world of headaches downstream. (𝘙𝘢𝘪𝘴𝘦 𝘺𝘰𝘶𝘳 𝘩𝘢𝘯𝘥 𝘪𝘧 𝘺𝘰𝘶'𝘷𝘦 𝘦𝘷𝘦𝘳 𝘣𝘦𝘦𝘯 𝘢𝘴𝘬𝘦𝘥 𝘵𝘰 𝘧𝘢𝘴𝘵-𝘵𝘳𝘢𝘤𝘬 𝘙𝘍𝘗 𝘳𝘦𝘲𝘶𝘪𝘳𝘦𝘮𝘦𝘯𝘵𝘴, 𝘰𝘳 𝘩𝘢𝘥 𝘭𝘦𝘢𝘥𝘦𝘳𝘴 𝘱𝘶𝘴𝘩 𝘧𝘰𝘳 𝘤𝘦𝘳𝘵𝘢𝘪𝘯 𝘴𝘶𝘱𝘱𝘭𝘪𝘦𝘳𝘴, 𝘪𝘨𝘯𝘰𝘳𝘪𝘯𝘨 𝘮𝘢𝘵𝘦𝘳𝘪𝘢𝘭 𝘳𝘪𝘴𝘬𝘴?!) 𝐖𝐡𝐚𝐭 𝐈'𝐯𝐞 𝐥𝐞𝐚𝐫𝐧𝐞𝐝: 💡 𝙁𝙤𝙘𝙪𝙨 𝙛𝙞𝙧𝙨𝙩: Be specific about your needs in RFx docs. If you’re unclear, suppliers will be, too. Before going to RFP, always have quantifiable evaluation criteria finalized and approved by the Spend Owner. 💡 𝙄𝙩’𝙨 𝙣𝙤𝙩 𝙟𝙪𝙨𝙩 𝙥𝙧𝙞𝙘𝙚: The cheapest option often costs the most in the long run. Prioritize value over price. Suppliers who price things materially lower than benchmark norms usually cut corners somewhere to meet margins. 💡 𝘾𝙝𝙚𝙘𝙠 𝙧𝙚𝙛𝙚𝙧𝙚𝙣𝙘𝙚𝙨 𝙩𝙝𝙤𝙧𝙤𝙪𝙜𝙝𝙡𝙮: Source independent references via your network. Past performance tells the real story. Ask the right questions and listen closely to the answers.  💡 𝙏𝙝𝙞𝙣𝙠 𝙖𝙝𝙚𝙖𝙙: Can the supplier grow and evolve with your business? Are they innovative and flexible? Does their company culture and ways of working align with yours?  💡 𝙆𝙣𝙤𝙬 𝙩𝙝𝙚 𝙧𝙞𝙨𝙠𝙨: Most suppliers come with some level of risk, the key is understanding and managing it. Conduct due diligence on short-listed suppliers. Outputs should inform the down-selection process, with material deficiency action items included in the contract. 💡 𝘾𝙝𝙤𝙤𝙨𝙚 𝙥𝙖𝙧𝙩𝙣𝙚𝙧𝙨, 𝙣𝙤𝙩 𝙫𝙚𝙣𝙙𝙤𝙧𝙨: The best suppliers care about your long-term success and aligning with your goals.  Look at proposals holistically, thinking beyond the transaction and into value creation. 𝐇𝐞𝐫𝐞’𝐬 𝐭𝐡𝐞 𝐭𝐡𝐢𝐧𝐠: Looking back, I’ve been at firms in seasons where costs were prioritized over total value, often leading to short-term gains but long-term challenges. There were times I should’ve taken a firmer stance about material supplier risks identified and bias in the selection process.  As procurement peeps, we provide recommendations based on long-term value, risk management, and partnership potential. This includes having the courage to speak up with informed and actionable guidance when things don't pass muster. The goal is to ensure sourcing outcomes build a foundation for success, not just a quick win. 📢 𝙋.𝙎. 𝙒𝙝𝙖𝙩 “𝙨𝙘𝙝𝙤𝙤𝙡 𝙤𝙛 𝙝𝙖𝙧𝙙 𝙠𝙣𝙤𝙘𝙠𝙨” 𝙨𝙤𝙪𝙧𝙘𝙞𝙣𝙜 𝙡𝙚𝙨𝙨𝙤𝙣𝙨 𝙬𝙤𝙪𝙡𝙙 𝙮𝙤𝙪 𝙨𝙝𝙖𝙧𝙚 𝙬𝙞𝙩𝙝 𝙮𝙤𝙪𝙧 𝙮𝙤𝙪𝙣𝙜𝙚𝙧 𝙥𝙧𝙤𝙘𝙪𝙧𝙚𝙢𝙚𝙣𝙩 𝙨𝙚𝙡𝙛?

Supplier evaluation and selection are key components of an organization's supply chain as they can either support smooth operations or introduce challenges if not handled intentionally. A well-thought-out supplier selection process supports long-term value creation and acts as a proactive risk management tool across your supply chain. Here are the core criteria to consider when evaluating suppliers: ➡️ Quality – This goes beyond just the output. Quality includes how the supplier runs their operations, their labor standards, and how well they meet the expectations that were outlined during the needs phase. Defining what “good” looks like requires input from across the organization. ➡️ Performance – This refers to the supplier’s ability to consistently meet expectations over time. Delivery accuracy, responsiveness, service level, and reliability are all part of this. While often tracked post-engagement, having clear expectations upfront can guide alignment early. ➡️ Capacity/Capability – Does the supplier have the ability (and flexibility) to meet your current and future needs? This includes physical capacity, operational capability, and even regional flexibility. Understanding this early allows for more resilience if other supply points are disrupted. ➡️ Financial Condition – A supplier’s financial health directly impacts their long-term viability. You need partners who are stable enough to weather market shifts and reinvest in improvement. Keep in mind, this is a two-way street—timely payments and fair terms matter too. ➡️ Price – Unit cost alone doesn’t give the full picture. Look at total cost of ownership: transportation, storage, handling, returns, service needs, and more. Focusing only on sticker price is short-sighted. Take a broader view of how cost plays out across your supply chain. ➡️ Technology – Information flow matters. Can they integrate with your systems? Do they require manual emails or do they support API, EDI, or supplier portals? The way data flows between your businesses affects performance, cost, and resource needs on both sides. ➡️ Geographic Location – Where your supplier operates will influence lead times, flexibility, risk exposure, and total cost. Geography also brings additional layers like tariffs, taxes, cultural norms, and even currency impacts. This is a critical one when thinking about resilience. Vendor selection should not be a reactive activity. Having a set baseline criteria based on what your needs are currently (and where they are headed long term) can make all the difference in how much value or risk gets built into your supply chain later! #supplychain #procurement #processimprovement

Cost Savings ≠ Value Creation... Procurement teams love a good deal. Lower costs, tighter contracts, bigger savings; it all looks great on paper. But here’s the problem: a great deal on paper means nothing if it delivers no real value to the business. Too often, procurement is measured by cost reductions rather than business impact. Cutting supplier margins might look like a win today, but if it leads to lower quality, supply chain disruptions, or missed innovation, what have you really gained? The Hidden Costs of Cost-Cutting ➡️ Cheaper doesn’t mean better A lower price often comes with trade-offs—slower response times, reduced service levels, or hidden risks that don’t show up until it’s too late. ➡️ Savings today, losses tomorrow Short-term cost reductions can erode long-term growth. The wrong supplier choice can slow down production, impact customer experience, and create operational headaches. ➡️ Price is not king The best procurement teams don’t just negotiate better prices. They build supplier partnerships that fuel innovation, resilience, and competitive advantage. A Smarter Approach ✅ Focus on total impact, not just initial savings. Measure success by how a supplier contributes to efficiency, innovation, and long-term stability—not just by how much they cost. ✅ Shift from price-based decisions to value-based partnerships. Suppliers that bring expertise, reliability, and new ideas are worth more than those that simply offer the lowest bid. ✅ Think beyond procurement, think business strategy. Great procurement leaders aren’t just cost-cutters. They’re enablers of business growth, ensuring the right suppliers are in place to drive long-term success. Sometimes that means higher prices initially for long term gains. Because at the end of the day, cost savings mean nothing if they don’t create real value. Are you optimizing for cost or for real competitive advantage?