Supplier Evaluation and Selection

New supplier qualification: limited start, then proof

When a new supplier enters a critical or core purchase, I do not treat the first order as full endorsement.

A practical approach I have used is an 80/20 start: keep the larger share of volume with the proven source while the new supplier begins on a smaller, controlled share. This is a practical exposure model from experience — not a rule that every category must follow 80/20 forever.

The proving window that mattered in my work was typically on the order of three to six months. That is long enough to see more than a lucky first shipment: recurring quality, schedule honesty, reaction when something goes wrong, and whether the organization behind the quote is the same organization that ships. Three to six months is a practical proving horizon from experience, not an industry certification period.

Only after that evidence did gradual volume increase make sense. Jumping straight to majority allocation because a sample looked good, or a commercial presentation was strong, is how capacity and quality surprises arrive later — when the factory already depends on the volume.

Capacity risk: meeting today is not the same as having headroom

A supplier can fulfil current needs and already sit at the edge of capacity.

That distinction matters. Current delivery success answers whether the supplier can serve this volume now. It does not answer what happens when your demand rises, when their other customers surge, when a machine goes down, or when a material input tightens.

In evaluation, I treat “they delivered” and “they have resilient capacity” as different questions. The second one shows up in load tests, alternative routing inside their plant, honest discussion of shared capacity with other buyers, and how they behave when a rush request collides with their real calendar — not only in a brochure claim of available capacity.

Allocation: there are no two identical suppliers

Even when two suppliers pass qualification, they are rarely interchangeable.

Nuances decide: process capability, geographic lead time, communication discipline, tooling ownership, packaging practice, willingness to hold buffer, and how they escalate problems. Those differences are why allocation is a management decision, not a coin flip.

In practice, that often lands near a 51/49 (or similarly uneven) split rather than a clean 50/50. One source carries a slight majority because of a specific operational advantage; the second remains real — not symbolic — so the relationship stays dual without pretending both plants are the same. 51/49 here is an illustration of uneven dual allocation from experience, not a mandated split ratio.

The point is not the exact percentages. The point is that allocation should reflect observed differences, not administrative symmetry.

Price increases belong inside ongoing evaluation

After cooperation starts, a change in price or commercial conditions is not only a purchasing negotiation. It is an evaluation signal.

From practical experience with supplier price pressure:

• A smaller increase — in my work, on the order of about 3% — was first treated as a commercial problem to solve through negotiation and compensation, not as an automatic acceptance of a new cost base. Around 3% reflects the scale of smaller increases I dealt with in practice, not an industry benchmark or a universal decision threshold.
• A more serious increase required a verifiable economic basis: raw materials, energy, labor structure, investments, process changes — something that can be checked, not only asserted.
• If a larger increase arrived without a checkable basis, I treated it as a supplier-risk signal, not only as a margin annoyance. Unexplained commercial deviation is a reason to reopen risk and continuity questions, not to close the purchase order and move on.

Compensation does not always mean “refuse the increase.” It can mean volume shape, forecast commitment, payment terms, packaging, logistics sharing, or specification clarity — levers that change the economics of the relationship without pretending price is the only dial. Related cash-side negotiation notes belong with supplier payment optimization; the deeper cost comparison belongs with total cost of ownership / comparative supply analysis.

Supplier development starts after the contract

Qualification is not the end of the work.

After the agreement, the relationship still needs active attention: market news that affects their inputs, structured audits, joint problem-solving, and continuous improvement on the points that actually touch your plant — quality escapes, schedule honesty, packaging damage, documentation discipline.

A supplier left alone after the first successful months is a supplier whose capacity, culture and cost base can drift without your dashboard noticing until the next shortage or the next price letter.

What you are actually buying

Price is visible. Resilience is not — until the week you need it.

You think price is what you are buying, rather than the supplier’s ability to deliver when you need them most.

That is the closing test I use for evaluation and selection. If the commercial case only works when everything is calm, the selection is incomplete.