As a consumer, when you want to purchase an item, whether it is a new car or a flat screen television, you will most likely do some research on the prices of your local stores or from vendors on the internet. When you have narrowed your search you then look at other criteria that may be important to you, like warranty or availability. Lastly you will look at other less tangible criteria such as your previous experiences with the vendor and how their customer service was. This behavior is exactly the same for companies when they want to evaluate the vendors in their supply chain.

Unless your company only uses one vendor for each item they purchase, there will enviably be occasion when a decision has to be made as to which vendor gets your business. There are a number of different scenarios when this will occur, for example when the item is purchased for the first time and when an item is no longer single sourced.

Purchasing an Item For The First Time

When a decision has to be made between vendors, the purchasing department will use some vendor evaluation method to be their tool in the decision. If the item is to be bought for the first time, the purchasing department may have contacted a number of vendors and sent them a Request for Quotation (RFQ). Each vendor would then complete the RDQ with the information that was required, normally price and terms. The purchasing department would then use these completed quotations, in conjunction with other information they have collected on the vendors, to make short list for further evaluation or make a final selection. The purchasing department would evaluate the vendors based on a number of criteria they had decided upon which may include objective criteria such as price and warranty and subjective data which would include past experience with the vendor. Based on the weighting given to these criteria the purchasing department would be able to fairly evaluate each vendor.

Choosing Between Vendor

If