SOP on Sources of Supply – Vendor Selection

SOP on Sources of Supply – Vendor Selection 
1.0 Purpose: This SOP describes the guidelines for vendor selection.
2.0 Scope: This SOP applies to purchase department staff and Quality Control staff. 
3.0 Responsibility: Quality Assurance Manager to ensure that procedure is followed.
4.0 Materials and Equipment: As required 
5.0 Procedure: 
5.01 Purchase involves identification, development and at times creation of appropriate sources of supplier(s) of materials, their evaluation and selection of capable vendor. Varied economic and non-economic factors are considered while evolving optimum decision.
5.02 A business enquiry is made with appropriate supplier and shortlisted out of the given sources of suppliers in terms of production facilities and capacity, financial standing, product quality, possibility of timely supply, technical competence, manufacturing efficiency, general business policies followed, standing in the industry, competitive attitude, interest in buyer’s orders etc.
5.03 The size of approved list largely depends on circumstances of each case. The inclusion of more suppliers in approved list facilitates and ensures availability of adequate supply.
5.04 The purchase policy and procedure differ according to type of items to be purchased. The suppliers are rated on the basis of their past performance with the company. In vendor evaluation generally three basic aspects are considered – quality, service and cost.  
5.05 Following considerations must be evaluated in selecting a supplier – 
1. Supplier can provide raw material that we need.
2. If more than one grade of raw material is available, supplier must be capable of providing different grades. 
3. The supplier must be capable of providing quantity required to satisfy production schedule.
4. Supplier’s capacity to provide increased quantities quickly in event that demand for product increases rapidly.
5. Whether supplier is a manufacturer or distributor.
6. Cost of raw material.
7. The reputation and reliability of supplier.

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