12 challenges in supplier, vendor selection
C hoosing a control system is intimidating simply because it’s not a job anyone does every day and because continuous "marketing embellishment" makes so many solutions indistinguishable, according to Dave Woll, enterprise integration vp, ARC Advisory Group (Dedham, Mass., www.arcweb.com). To help users wring emotion out of this process and instill the consistency needed to secure the most useful systems and suppliers, Mr. Woll and ARC have several basic suggestions:
Users should begin by developing a common, in-house understanding of their specific issues and objectives. "This is by far the most difficult task in vendor selection and building a control system," says Mr. Woll. "People need to sit down, truly think about their manufacturing needs, and develop cross-functional teams to seek common agreement on their requirements." This understanding can then direct research on potentially useful systems and suppliers. "This may be obvious, but there’s a natural tendency in these fast-paced times to sometimes sacrifice the time needed to properly define manufacturing problems and requirements," he adds.
To lessen vendors’ superficial similarities, users must learn as much as possible about them and their systems. To aid this research, draft clear, complete specifications, and even improve suppliers’ understanding, Mr. Woll says users must form detailed definitions of an ideal control system’s capabilities, and then tailor those definitions to fit their application’s specific needs. These tailored definitions can be used to draft specifications that help resolve some of the usual differences in suppliers’ proposals and bids.
Seek to maximize network and control system lifecycles and preserve capital investment by basing new purchases on their ability to extend the typical control system’s 15-year lifecycle; reconcile disparate legacy systems and draft a component replacement schedule; and require that suppliers provide "keep current" strategies for their systems. Mr. Woll adds these strategies are so important because maintenance affects about 80% of a control system’s total cost of ownership (TCO), while buying a system usually constitutes only 20% of its TC). Longer lifecycles mean users need to know even more about prices they’ll likely pay in the future.
Secure fair prices by using specific system requirements to help gather prevailing market data, and then factor this price data into individual systems’ specifications.
Prevent project costs from escalating by asking suppliers to commit to long-term pricing strategies.
When evaluating systems, components, and suppliers, evaluate how closely they meet specifications and how well they’ll be able to boost network or control system performance. "Don’t worry about who is cheapest. Be concerned with who delivers the most value to your system’s lifecycle," says Mr. Woll. "No supplier will satisfy every requirement, but decisions are made on which delivers the best available solution."
To get a project’s team members to assume ownership of the selection process, emphasize the learning process they used to define network or control system needs, objectives, and commonly agreed on requirements. Also, seek to divide a project into separate tasks that can be assigned to individual team members.
To help make a team creative and effective, Mr. Woll says management should support the team’s need to understand details of the project, but the team shouldn’t have to create detailed descriptions of each system. "Focusing on the user’s project details, rather than each vendors’ system details, can save users 80% on the selection process and give them a better solution," he adds.
Using its detailed requirements and specifications, the project team can also document its decisions during the selection process and explain its reasoning to management. Consistent documentation then allows suppliers to be rated quantitatively, and provides an audit trail of the team’s decisions.
Develop and use specifications that are rigorous enough to form the basis for actual purchase orders. This will also aid vendor understanding.
Repeat this selection process to aid continuous improvement, and help evaluate how well long-term suppliers are meeting requirements.
Use this process to help satisfy traditional due diligence responsibilities.
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