The purchasing department takes responsibility for the vendor selection which is an integral part of the procurement management process. The vendor selection is a subsidiary process that allows clearly stating, defining and approving those vendors which meet requirements of the procurement process. The buying department is responsible for creating a list of potential suppliers and submitting that list to the project manager in order to decide on the vendors in conference. However, the ultimate decisions on the vendors cannot be made without vendor selection criteria, so the purchase department in cooperation with the project manager needs to develop and use such criteria.
Often vendor selection criteria vary between organizations; however, they need to be identified and included as a component of the inventory management plan. The criteria for vendor selection include the following:
- Delivery – an ability of the contractor to procure all required items within desired delivery dates
- Quality of the procurement services – an ability of the contractor to provide products with the expected quality
- Cost of the procurement services – a comparison of prices provided by several contractors
- Past performance – records on the contractor’s procurement activities undertaken in the past