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- How many suppliers do you currently have today and how many would be optimal for you?
- How have you communicated and implemented your preferred suppliers to your organization?
- What does it mean to be a preferred supplier for your company and how can you create mutual benefits?

Preferred Supplier List
The Preferred Supplier List is the document which your organization should use in the daily tactical supplier selections. The document contains a list of your approved suppliers which you have assessed and continuously follow up with different KPIs. They play an important role in your commodity strategy and you have a plan for how you want to drive the business with those preferred suppliers.

Having a communicated and implemented Preferred Suppliers List means that the rest of your organization, also outside sourcing, knows which suppliers they should send RFQs to in any tender process. You have signed frame agreement with the preferred suppliers and you have continuous business meetings in order to optimize business and minimize risks.

It is crucial that the Preferred Supplier List is implemented through a successful change communication process, updated in your purchasing systems and synchronized with Accounts Payable for optimizing efficient administration. If the preferred supplier list is unknown to your organization, your commodity strategy will fail and your company will miss saving opportunities.

The format of the Preferred Supplier List could be different. Important is to, for each commodity, list the preferred suppliers and also their capabilities they are best suited for. This way you assure that you send the right RFQs to the right suppliers. Some suppliers are best in a selected number of capabilities, some are best in others and it is key to distinguish this in the Preferred Supplier List.

Common pitfalls

- There are only commodity strategies but no central Preferred Supplier List covering all commodities. This means it will be difficult for your internal stake holders to understand which suppliers to involve.

- The Preferred Supplier list is not implemented. Don’t underestimate the importance of a thorough Change Communication project to get your Preferred Supplier List implemented for real. If you fail to implement it, the Preferred Supplier List will become useless. This will increase the risk that the organization will find ways to bring in suitable suppliers which maybe are not approved and it will add up to the total supplier base resulting in a long supplier tail.

- The Preferred Supplier List is not clear of what supplier to use or certain capabilities. This means that a supplier on the Preferred Supplier List might get RFQs with products/service that are over or under their capabilities which could result in a weak supply chain

- The Purchasing Policy is not known or not directing how to use the Preferred Supplier List meaning risk of using non approved suppliers