Vendor Prequalification
When selecting vendors, purchasing managers must balance cost and quality considerations to get the most value from suppliers. But depending on the type of hardware, software, products and services a company purchases, it can be difficult to identify a suitable vendor. The prequalification process is a step taken in advance of the vendor selection process that allows a company to screen and control the vendors it will consider.
The prequalification process begins by establishing the criteria that the vendor must meet. Criteria may include such things as length of time in business, technical expertise, past performance and financial condition. Once the criteria is established, the company publicly advertises the specifications to solicit applications and resumes from vendors. In order to further insure an applicant meets the criteria, the company may require certifications, product review and demos, or other documentation.
The prequalification process has several advantages. It helps to ensure that only vendors with the qualifications and reputation required by the company participate in the final vendor selection process. It also helps Purchasing personnel control the number of vendors to be evaluated. And, by using the prequalification process, Purchasing can accelerate the time-to-selection, ensuring that only those vendors that meet their requirements are considered.
In some cases, the prequalification process also allows a company to establish a Qualified Vendors List (QVL)—a list of prescreened vendors that meet specified criteria. Such a list may be necessary for organizations with repeated purchasing needs, such as those associated with an ongoing maintenance and repair program. A QVL also may help Purchasing personnel who are under pressure to reduce costs by streamlining the process of evaluating multiple vendors and enabling quick selection when emergency needs arise.
The prequalification process also may help to identify vendors that are reliable, capable and willing to work in a long-term relationship with the company. It allows the company to confirm the vendor’s reputation and assure that the vendor is capable of delivering timely and reliable products, services or solutions.
Finally, the prequalification process can uncover potential weaknesses in the supplier pool. By following a set of established criteria, the prequalification process can reveal a shortage of qualified suppliers, and the vendor selection process can be used to identify potential sources among vendors that may have been previously overlooked.
Therefore, prequalifying vendors can benefit a company both now and in the long run. It can help an organization save time, gain control over vendor selection and realize cost savings. Prequalification also can prevent costly mistakes in selection and provide vendors who are better suited to the company’s needs.
